The song about Fairytales is probably "You're the one" from the 78 album.

About the dancers, I have found this :

several awful dancer who were klutzes and therefore stood out where there should have been group precision [[there were two groups of dancer and the second team of five were really super, showing how poor the first four were).Billboard 30/9/1978
The show ended with four of the male dancers, who grinned frantically during all their numbers as if they were desperate Miss America contestants, carrying Diana like an offering back into the screen, up the stair to heaven. Village Voice - 16 octobre 1978
I don't think it had to do with the time. In fact, Minnelli, Cher, had all great dancers.
It's probably that Diana didn't care at all, she had her brother on her show, and maybe it was a favor.