It sounds like the girl in the OP was having a perfectly natural reaction to someone she had never met touching her in an unwelcome manner. Naturally, the lady meant well, but it's a common behavior for older people to impose themselves on small children without so much as a by-your-leave. If the situation were reversed, they'd object. Loudly.
We observed our very sociable DD as a baby meeting new people, where she'd always hang back and watch, before deciding whether she wanted physical contact with them. Everybody wants to hold a baby, though. We always told people, "Don't go to her, let her come to you," and that served pretty well.
I'm looking at a Santa picture taken when she was three as I type this, in which she's welling up with tears. She had a wonderful conversation with him leading up to that. Then, when it was time for the picture, he gently repositioned her to face towards the camera, and as this was a less secure position, he held her in place with one hand around her back and his other hand over her stomach.
Once the picture was over, DW asked what happened, and DD responded, "Santa touched my belly. That wasn't right."
Priceless.
