There are two different conditions:
ketosis, in which state the body runs on ketones and is, as you rightly say, a perfectly natural condition when the human body adapts to a low-carbohydrate diet;
and ketoacidosis, which happens more to Type 1 diabetics, though I believe it can happen with Type 2s in some circumstances. I'm afraid I don't understand it fully, but any Type 1 who runs high blood glucose levels and has high ketones is seriously ill and usually needs hospital treatment.
There is more discussion on the forum (Search "ketoacidosis") and elsewhere via Google, including Wikipedia. There will also be some more knowledgeable members alon soon to help further.
Viv 8)