Ugh - never a fun situation to be in. Can you write your therapist an e-mail or something letting her know how you feel about this all? You don't have to see this friend - that's your right.
I kinda had a similar experience to this: A couple years ago I became really good friends with a girl who lived in a neighboring hall at my college. Things were great for a few months, and it almost evolved into a semi-relationship-thing, but then things started to get weird. She had some serious issues, and I eventually one-sidedly broke off our friendship, with it culminating one night being at a restaurant in a group of friends and me nearly shouting "get away from me". Next day, she's dating my roommate - whatever, as long as they aren't at my apt. Next year, im going with a group of friends to a halloween party, and guess who is (unbeknownst to me) hosting the party... And she was (is) still dating my (now former) roommate.
That's the weirdest, most awkward, absolutely sickening feeling. I feel for you. Just remember, you can always decline to go. I don't think your therapist would want to put you into a situation that would make you upset.