I'm struggling to understand the timescale of this, because 4 years seems a long time for this to have been an issue with your T. For me, any therapist who minimises a client's negative reaction to being touched (even if she didn't have all the details) has no business being a therapist.
She tried to reassure you that you were safe? That's not her job in this scenario, her job is to validate your experiences. This goes to show that dual relationships in therapy are a bad idea. She clearly felt some loyalty to the instructor when all of her loyalty should have been with you and your experiences, especially in your therapy hour.
I would personally find a new therapist and not look back. Take care of yourself.