Sorry all of this is going on, DP. My take on it is that your t's lack of good boundaries, possible countertransference, and misinterpretation of your requests for touch are rendering him (at least) semi-incompetent. You are not over-reacting. It sounds like your t has been too friend-like with you which has led to confusing, consuming, unhealthy thoughts. As someone whose therapist actually brought about an outside friendship with me during therapy, I know how debilitating and damaging this is. It's an absolute mind-bender even to be led on into thinking you're friends in therapy so that an outside friendship can take place after therapy. Remember, you went to therapy to get help for your self. You didn't go to have your therapist become your friend. Your therapist knows this and should have behaved more like a friendly therapist rather than an actual friend. This is all so wrong.

Lack of boundaries, transference, and countertransference confuse not just the client, they confuse the t as well. Please do not mistake that comment or anything I am about to say as a defense for a t, or blame for a client. My guess is that your t took you wanting to hold his hand or put your arm around him not as means to help you overcome your touch issues, but, that you would want sex from him (based on what you told him). Your t missed the mark hugely by not asking you for clarification. He instead made assumptions because his judgement is clouded by the confusion from countertransference. That confusion is so great he can't even figure out how to help you work through this. That's pretty scary.

Your t's bad boundaries have lead you to this point of feeling hopeless, taking the blame for all that's gone wrong, and shaming yourself. As others have said, this is not your fault. Please be kind to yourself as you figure out what to do. You seem to be pretty good at writing your feelings on PC. Have you considered writing him a note to better convey to him your thoughts and feelings?