Was I being rude?

I was asking a friend a question and she answered in in a way that could be interpreted sexually unintentionally - so another friend told her she had a dirty mind.. so I asked her the same question with a wink to show her that I understood the joke.. but she looked upset when I did that.. Why was she upset? was she just sensitive? who was in the wrong?

She sounds weird. Why would she get upset? Bizarre.

I also sometimes supervise her work - and it was in a work environment. could that be why?

Hmm... yes that's why. Keep it professional at work to avoid these situations in the future.