My lawyer mentioned something about a "diffusion" instead of a Red Notice. Is that better or worse? Does it mean I can still travel to some countries? It sounds like it is less official, but I am still worried about getting caught at a random border check.

A diffusion is basically a direct email between police departments, while a Red Notice goes through the central Interpol system. In some ways, a diffusion is more dangerous because there is less oversight from Lyon. You can find out more on extraditionlawyers.net about how to challenge these "informal" alerts. They can still lead to an arrest at the border. The problem is you might not even know a diffusion exists until you are stopped. You can appeal them just like a Red Notice, but it requires a different approach. I would treat it with the same level of seriousness. If one country is looking for you, they probably sent the alert to all the places they think you might go.