  Nanophotonic structures in single--crystal diamond (SCD) that simultaneously
confine and co-localize photons and phonons are highly desirable for
applications in quantum information science and optomechanics. Here we describe
an optimized process for etching SCD microdisk structures designed for
optomechanics applications. This process allows the optical quality factor,
$Q$, of these devices to be enhanced by a factor of 4 over previous
demonstrations to $Q \sim 335,000$, which is sufficient to enable sideband
resolved coherent cavity optomechanical experiments. Through analysis of
optical loss and backscattering rates we find that $Q$ remains limited by
surface imperfections. We also describe a technique for altering microdisk
pedestal geometry which could enable reductions in mechanical dissipation.
