Yvonne: "I can't admit that I'm in love with Elsa, because I believe that the physical laws of this reality make us being together a literal impossibility, yet I still struggle with letting go of those feelings because I'm human."
Readers: Still think Evie is just "dense."
Y'all. She knows that Elsa likes her, and she realizes that her own feelings are very much in the same vein. But she's so traumatized by the Villainess System (which, as people have pointed out, has included such directives as "push Elsa to her probable death" and, apparently, "stab Elsa with the knife she just gifted you") that she believes it's impossible for them to be together. And if that's true, then allowing herself to be in love with Elsa will only make things so much harder for both of them.
Elsa isn't safe around Evie, the Villainess System could strike at any time. The only ways to avoid it are for Yvonne to stay away from her (she tried that, and Elsa tracked her down), or have Elsa fulfil her story purpose and get together with a real love interest (which, she was literally created to do). Then, Yvonne's story purpose will presumably be fulfilled as well, ending the Villainess System and allowing her to be around Elsa without endangering her. And it's clear that Evie doesn't think "the heroine and the villainess get together" will count for that win condition. (whether she's correct about that assumption is obviously still up in the air, and I'm betting she's not)
I actually really, really like the psychology that's going on in this story, even if it's sometimes subtle. I loved Elsa's pained musing that maybe she should just accept "rejection," and I love that Garth is here to shake up the status quo. I also love how Evie went from "I just need to get away from her," to "I just need to get her together with someone, anyone," to "I need to make sure she gets together with someone good for her," to "I'm going to pick the person literally closest to actually being with me possible, in the hopes that will work." Despite how much she believes their relationship is doomed, she still can't help but want to be closer and closer with Elsa.