Bindi Nicholls, 50, told London's Southwark Crown Court her friend revealed to her that she had a consensual affair with her father from the age of 18 or 19.
But she said the alleged victim never told her that her first sexual encounter with Harris was when she was 13, and also dismissed claims that Harris sexually assaulted her friend while she slept in the same room as "sort of laughable" and "ridiculous".
The woman, who is one of four who claim the veteran entertainer indecently assaulted them, has told the court that he first groped her on holiday in the 1970s, when she was 13, and that on one occasion he assaulted her while Bindi slept in the same room. The star has admitted having a relationship with the alleged victim, but says it was consensual and began only when she was 18. He faces 12 counts of indecent assault, seven relating to his daughter's friend, on four women between 1968 and 1986. Yesterday Mrs Nicholls described her shock when the woman told her she had been having an affair with her father.
She said she confided in her friend that she suspected her father of having a sexual relationship with a woman who was living in an annexe at the family home, sparking an "odd" reaction from her.
"It felt like she was in love with my dad, which was just weird," she told the court.
The reaction prompted her to ask the woman if something had happened between her and Harris, she said. "She said 'Well, it's been going on since I was 18 or 19, Bindi, it's been going on for ages'."
Describing how she felt a "head rush" at the time, she said: "The shock was just appalling."
Breaking down, she described her reaction as "utter shock", saying: "It was just horrible.
"It felt like the whole world had changed in an instant." But she denied the woman's claims that it had been going on since she was 13, saying: "No, she never said that."
Mrs Nicholls said she later confronted her father over the phone about the affair.
"I rang him up and said 'What on earth has happened here, you have had an affair with my friend, how dare you, how could you, it's my best friend'."