Earlier quoted context omitted.
It doesn't matter if it was "more flirtatious than forced". A manager should not flirt with their reports. Managers are supposed to be responsible for the growth of their employees; making an employee so uncomfortable with you that they run away from you on sight is a spectacular failure to do your job.
Correct. It's harder to enforce judgements on this kind of thing though, because ambiguity exists about the intention. It's much easier to punish clear "do me a favor for the promotion/bonus" situations. I agree a blanket "no romance with direct reports" rule is best. I'm just astonished she didn't get an immediate transfer to another group. I would be livid if this was happening and HR didn't remove the power dynami…
So what would you do if a manager and his/her report fall in love (mutually)? Fire the manager? If not, then your "rule" can't be applied indiscriminately.