Under the assumption that you're in the US, it may be the case that you've already violated your school's policy on sexual harassment. It's important to recognize that quid pro quo harassment does also constitute sexual harassment under most (if not all) school harassment policies. Simply put, quid pro quo harassment occurs when a person incentivizes engaging in sexual or romantic activities with him or herself in the workplace. Again assuming that you're in the US, quid pro quo harassment is most likely prohibited by your college's sexual harassment policy. Title IX generally requires college's to have such policies.
As someone who is in a relative position of power over this student, any attempt to initiate or maintain a relationship with her is almost certain to be a violation of your school's policy, and could end up having quite serious implications for you, regardless of how your hypothetical relationship plays out. While you may view this student as being the initiating party, as the person in the relative position of power, it's your responsibility to set boundaries.
From your question, it's not clear to me exactly where you are getting the idea that this person is interested in initiating a relationship with you, so I would avoid broaching the subject directly, however you need to stop any further discussions of the sort you mention as soon as they come up by saying "I'm sorry, but that's not an appropriate topic for us to talk about". It isn't exactly what you're asking, but I can't help but notice that I don't see any evidence from your question that she's actually interested in having a relationship with you anyway. You say that you had a conversation where sex was mentioned, and that she touched your arm once. Neither of those things to me necessarily imply "interested in starting a relationship", though of course there may be other reasons that aren't in your question.
Other commenters here have suggested trying to switch teaching assignments, however I would suggest that that will not entirely mitigate the power differential necessary for quid pro quo harassment to occur. The best way to prevent her from claiming sexual harassment, is to not commit sexual harassment. It's not the answer that I think you want to hear, however it is the answer that you're likely to get from your school's HR/Title IX department.