If this is a psychodynamic therapist doing long-term therapy as well, saying erotic transference is not acceptable is really odd and, as far as I understand it and based on my knowledge and experience, this could actually really do harm to a client. Transference has an important message about the client's needs, conflicts, relational patterns - sounds like this therapist either doesn't know how to deal with it (unlikely for a psychodynamic therapist), or has personal issues around it. Or maybe something else entirely, which is why it could help to ask why this policy, if you haven't already done so. Personally I wouldn't go to such a therapist, nor would I refer anyone to someone who refuses to deal with such a common type of transference. Her prerogative, surely, but it just doesn't sound like a type of therapy that would welcome the client in his or her entirety as a person, in my opinion.

Anyway, the most important factor here should be how you feel and what you need, and I hope you will find that no matter what therapist you eventually choose.