There is some evidence of separation in the Middle Ages, though I can only speak for Northern Italy. Another caveat would be that most of the informstion that survives concerns fairly well-off families; records for the mentally-ill poor are much harder to come by. That said, most care for people with mental disorders seems to have been provided by the family. In circumstances where the family felt that it could not provide care or that the person in question was too much of a threat to the safety of others, a member of the family, usually the father, could approach a local magistrate and request that the mentally ill individual be placed in a prison. These prisons were not necessarily the dank dungeons we tend to think of (I would recoommend Guy Geltner's The Medieval Prison: A Social History). To my mind, this practice was not so much about isolating individuals with mental disorders as it was about communal governments augmenting family power. For example, a father could similarly have a magistrate imprison a son if he could show that the son was an excessively wasteful spender. A good book on mental illness in the late Middle Ages and Early Modern period is Elizabeth Mellyn's Mad Tuscans and Their Families.