Francesca Chaouqui, 35, told court that Balda revealed secrets about his private life to her in a hotel room while his mother slept.
The Vatileaks scandal is based around two books, written based on leaked documents that depict a Vatican plagued by corruption as well as implying Pope Francis has a lack of support.
Vallejo Balda did admit during an earlier hearing that he leaked documents to journalists, but Francesca Chaouqui, speaking on Wednesday, said she had not handed over anything more than press articles already in the public domain.
Reuters has reported that Msgr Angel Lucio Vallejo Balda told the court last month that his relationship with Chaouqui had been "clearly for me as a priest compromising," and he suggested the pair had been intimate.
Francesca Chaouqui has denied the claims: "I never had sex with him.
"I was never next to him carnally," she said.
However she did tell the court that he had confided "his sexual sphere" to her.
She went on the tell the court she could not reveal all of what was said to her because she had too much respect for promises she made.
Chaouqui and Vallejo Balda were both members of a now-defunct commission appointed by Pope Francis to advise him on Vatican reform.
The Spanish priest was imprisoned after violating the terms of his house arrest in March.
Fr Lucio Angel Vallejo Balda was allegedly caught communicating with the outside world, according to the Vatican.
Fr Lucio Angel Vallejo Balda and Francesa Chaouqui are being tried, alongside two Italian journalists.
In 2013 the Vatican made it a crime to disclose official documents in 2013 after a leak of information.
If found guilty, the defendants face up to eight years in prison.
The trial resumes on Monday.
