"There is some hope," the 21-year-old Evelyn Waugh informed his diary on 6 April 1925, "of a secretaryship in Florence with a homosexual translator." To Waugh, lately down from Oxford, sans degree and working in a flyblown prep school, the job seemed a godsend. For a month and more he sustained himself on the prospect of "a year abroad drinking Chianti under olive trees and listening to discussions of the most iniquitous outcasts of Europe". Then, on 30 June, the blow fell: "Scott Moncrieff does not want me." As Jean Findlay notes in this compendious biography of the translator of Proust, Stendhal and Pirandello, the rejection precipitated a crisis in Waugh's affairs. Shortly afterwards, he attempted – unsuccessfully – to drown himself.

However indirect the acquaintance – although the unwanted secretary was to visit him on his deathbed – Scott Moncrieff's connection with Waugh is a mark of the large number of distinct, though sometimes interconnected, worlds in which he contrived to operate throughout his 1920s heyday. His mentor JC Squire, arch-reactionary editor of the London Mercury, once declared of himself that he was a centipede with a foot in a hundred camps, and the same, up to a point, could be said of his protege. On the one hand, he was a Winchester and Edinburgh University-educated Scottish gentleman and first-world-war army officer, whose friends included the son of a future prime minister and whose hereditary alliances extended all the way to the War Office. On the other, a host of factors, from his religion, his sexual inclinations and his professional life, bore him off into landscapes where gentlemanly Wykehamists were less likely to be found. His conversion to Catholicism propelled him into the orbit of charismatic coreligionists such as GK Chesterton, Monsignor Benson and Ronald Knox. His homosexuality led him to the remnants of the Wilde circle and friendships with Robert Ross and the bookseller Christopher Millard, who may well have seduced him. And, to take only one postwar job offer, there can't be many gay translators who found themselves asked to write the official history of the King's Own Scottish Borderers.

Findlay, whose first book this is, turns out to be Scott Moncrieff's great-great-niece, and there is far more in it about his idyllic late-Victorian childhood than his grapplings with À la recherche du temps perdu. But she is finely attuned to some of the paradoxes of his career. As a child, Scott Moncrieff (born 1889) can sometimes seem a touch too good to be true – pious, good-tempered and precocious. ("It's a very good play," he wrote, aged seven, of As You Like It. "But no real woman would ever think of doing the things that Rosamond and Celia did.") At the same time, there was a more raffish, risk-taking side to his makeup – the glittering Winchester career, for example, collapsed into fragments when he inserted what, for the Edwardian era, was a jaw-droppingly explicit gay short story into the school magazine.

All this naturally leads Findlay to talk about her great-great-uncle's "double life" and the stratagems wheeled into place to deter parental interest in his visits to Ross's lodgings in Half Moon Street. Quite as fascinating, though, are some of the dualisms of his professional calling. For here, unusually, was a man gravely wounded in Flanders, and awarded an MC for gallantry in the field, whose letters home from the front are about friendship, flowers and the beauty of the French countryside rather than disease and carnage, and who rebuked certain of Siegfried Sassoon's war poems for their satirical excess. It is the same with Proust, a modernist master whose unashamedly highbrow appeal sits rather oddly with the aesthetic conservatism that led his interpreter into fantastically bad-tempered rows with the Sitwells and other advocates of what he called "dancing on the hecatomb".

To her credit, Findlay declines to invest the decade-long engagement with A la Recherche with any of the mythological glory that usually attends such undertakings, and points out that Scott Moncrieff's move into translation came about largely by accident: a collection of satirical sketches, offered to the firm of Constable, had been turned down on grounds of super-topicality; Proust seemed the next best thing. Happily, there was money to be made from it – £150 a volume from Chatto and an unusually generous £500 from the American publishers, Boni. By the late 1920s, his earnings from literary work amounted to £1,000 a year – a considerable sum in an era where TS Eliot's Criterion paid its contributors a princely £1 per 500 words.

Proust died in 1922, long before the project was complete, impressed by the rendering down while deprecating its occasional floweriness and over-elaboration: had Scott Moncrieff added the word "to" before Swann's Way (the title of Du côté de chez Swann) he would have "saved everything", its author insisted. The translator by this time had disappeared to Italy, where he combined a prodigious work rate – two chapters a day was not unusual – and spying activities for British intelligence's "Passport Office", with a variegated social life that took in everyone from Harold Acton and DH Lawrence (by whose books and personality he was unconvinced) to the Florentine bookseller Orioli and, we infer, a great deal of bought sex. Much of the £1,000 a year by this point was being used to support a collection of hard-up nephews and nieces, and his Who's Who entry under the heading "Recreations" is a nicely ironic "nepotism".

Dead at 40 of an oesophageal cancer that, Findlay speculates, may have had something to do with his fondness for oral sex, Scott Moncrieff is, in the end, rather hard to pin down. The bawdy, and, to be honest, faintly embarrassing, badinage he exchanged with his fast friend Vyvyan Holland – Oscar Wilde's son – gives no hint of the uncertainties that dogged his early career and the pseudonyms that clouded his search for a literary identity. The great romantic passion of his life – for the heterosexual Wilfred Owen – seems not to have been reciprocated. To read JC Squire's obituary notice ("That poetic, but positive and staccato soul … the supercilious curl of his moustached lip, and the fierce, straight look in his eyes") is to wonder whether it may not have concealed someone else altogether.

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