I don't really have any advice, but I have a similar issue. I have been like this since I was pretty young. People have asked if I was molested, but I wasn't. It's a very frustrating problem to have because some people really do not respect the fact that you don't want to hug them. Other people get offended at the flinching.

As I have gotten older, it has gotten easier for me to engage in a more normal way, giving a friend a hug, etc. I still have some issues I don't want to post publicly that are quite bothersome, but I'm not sure what to do about it either. Desensitization has worked in some ways but not others, if that makes sense. I can deal with the hugs and basic stuff, though.

You might find it interesting to read about Highly Sensitive Person and Sensory Processing Disorder.