As David Arquette tries to deal with the fallout of his recent relapse and painful breakup from his girlfriend, an insider tells Breaking Celebrity News that new reports of his ex-wife, Courteney Cox dating her Cougar Town co-star Brian Van Holt have sent him into a tailspin.

"Courteney was seeing Brian while she and David tried to mend things," the insider confirms. "It's giving him flashbacks."

Though David is telling friends he's happy that his ex has found love, "He's always been bad with hiding his true feelings," the source says. "Inside, it's killing him to see her with a new best friend. His status is taken over… He feels replaced."

Caught in an emotional maelstrom, his drinking "is only escalating," the source says. And rehab is not in sight.

"David needs to accept the fact that he has a problem," the source says. "He's in denial."

Just Wednesday, David was spotted out at West Hollywood hotspo