In a tragic ending to one of the nation's most highly publicized child custody battles, police today found the body of the daughter-in-law of the retired chairman of the Walgreen's drugstore chain in a seedy basement flat in Chicago's West Side, dead of an apparent drug overdose.

The death of Loren Walgreen, 31, was similar in many respects to that of her husband, Tad, scion of the founding family of the $18 billion drugstore chain, the nation's largest. He died of a cocaine overdose in a modest apartment three years ago after agreeing to allow his estranged father and his stepmother to adopt his two children, then age 7 and 5.

Loren Walgreen, who also had consented to the adoption, nonetheless recently renewed an eight-year legal battle against her wealthy in-laws in an effort to secure rights to visit her children, her attorney said. Arguments on her appeal to vacate the adoption consent had been scheduled for next month in an Illinois appellate court.

At the time of a bitter custody battle in Cook County Court in 1996, Loren Walgreen said her husband's family was using its enormous wealth to deprive her of her children. "The money is power. It's giving them a license to steal my children," she said.

Chicago Police Commander Gerald Mahnke said Walgreen died while visiting friends in the West Side basement apartment, which he said had been the scene of previous "narcotics-related incidents." The two women and a man who live there told investigators Walgreen was "incoherent" when they went to bed about 8 p.m. Monday and showed no sign of life when they found her at 1:45 a.m. today. No charges were brought against the occupants. Mahnke said police were treating the death as drug-related.

Neighbors of the run-down "two-flat" structure in a neighborhood known by police for its crack houses said Walgreen was a frequent visitor there. One of them, a woman who declined to give her name, said, "Now everyone cares about her. [Things happen] here all the time and nobody cares about that."

Loren Walgreen had convictions for narcotics offenses and prostitution and had been hospitalized repeatedly for treatment of drug addiction and depression. Her husband, who was 36 when he died of what was ruled an accidental drug overdose, served time in the Joliet Penitentiary on a drunk-driving conviction. He was facing a jail sentence for unlawfully obtaining prescription painkillers from a Walgreen's store when he died.

His father, Charles R. "Cork" Walgreen III, who retired this summer as chairman of the 2,894-store chain, declined to be interviewed. But he and his wife, Kathleen, said in a statement issued by their attorney that the family was "deeply saddened by the loss of this young woman who is yet another victim of this epidemic of drug abuse."

"Through years of our trying to help Loren overcome her addictions, in the end, sadly, these drugs were more powerful. We pray that now, she has found peace," the family said.

The family's lawyer, Melvyn H. Berks, said that even though Loren Walgreen had sought to vacate the adoption consent decree that she signed last year, she had made no attempt to see her son, Alex, and daughter, Brook.

However, Loren Walgreen's lawyer, Alan Toback, said that the victim's in-laws had not only refused the mother permission to visit the children, but also had done nothing to help her overcome her addiction.

"The Walgreens have more money than God, but they did nothing except take her children from her," Toback said. "In most families, they would step in and try to do something to help her, but that never happened here."

However, court records show that in 1993, after Loren Walgreen attempted suicide and her mother, Patricia Goldbortin, took custody of the children, Charles and Kathleen Walgreen provided a nanny for the children as part of their support.

Also, during the adoption trial in 1996, Tad Walgreen's grandfather, Charles R. Walgreen Jr., testified that he had sent $900 a month to Loren Walgreen when her husband went to prison and that when she failed to use the money for rent, he sent the money directly to her landlord. In addition, the couple received $800 monthly in "child support" under a family trust set up for Tad Walgreen, according to court testimony.

The grandfather also testified that when he visited the couple's apartment in 1993, he found squalid living conditions, including feces and soiled clothing on the floor, dirty pots and pans, stained carpets and a hole punched in the wall.

Asked why Loren Walgreen was appealing the adoption consent so soon after signing it, Toback said, "She probably never could live with herself after that. Maybe she was hoping she could someday see her kids." Toback called the case "a large human tragedy--a tragedy from start to finish."

Tad and Loren Walgreen were married in 1988 after meeting at a suburban Chicago hospital, where she was undergoing treatment for depression and he was in an alcohol rehabilitation program.

The second of three sons by his father's first marriage, Tad Walgreen by all accounts grew up living with his mother in far more modest circumstances than that to which the Walgreen family was accustomed in the affluent North Shore suburb of Lake Forest. He moved in briefly with his father during his teenage years, but the two soon became estranged and Tad reportedly lived in Colorado and Arizona, bouncing from job to job and struggling with a drinking problem until his death.

Special correspondent Kari Lydersen contributed to this report.