Good chapter, really feeling Xingyuan's confusion not only about being attracted to girls in general but violently attracted to this one girl in particular. I'd say that besides the traumatic experiences with homophobia it is also this feeling of being a stranger in Mu Xiaoen's world that's causing her pain. We can see this in Xingyuan's reactions to seeing Xiaoen in the nail studio or with her supposed cousin and the kids, Xingyuan very carefully observes Xiaoen's close interaction with everybody and in one chapter even comments that "this is her world", sort of implying that she herself is but a stranger there.
Xingyuan's experiences with homophobia might add to this by making her feel unable to enter Xiaoen's world due to her "impure" intentions, but ultimately it is a sense of distance to a person that she's become immediately enraptured by which causes her pain, she see's Xiaoen's world but fails to see that there could be a place in it for her or that Xiaoen would even want to have her in it. Psychologically, this feeling is likely caused by Xingyuan's own past where she's been made to feel like an outsider due to her "abnormal" sexuality, so this mode of living has become permanent for her, making it hard to perceive herself as anything but a permanent outsider even if the people around her seem keen on making her a part of their community (as Mr Wang does) or when her "impure" feelings towards a girl are actually (rather transparently) reciprocated. Xingyuan feels hurt by seeing Xiaoen not just because of her repressed sexuality, but also (and I'd argue primarily) because seeing her move so smoothly through her own world makes Xingyuan feel all the more removed from it, she's awkward and uncomfortable with this world, she doesn't know or trust it and yet she still desires the person seemingly at its core, making her feel guilty and inadequate, further increasing the sense of distance to a person she wants to be close to.
So to cut a long story short, whilst a homophobic environment certainly seems to be the root cause for Xingyuan's insecurities, this story isn't a simple "I like this girl, oh no that's bad I shouldn't do that" story but rather a story about the psychological impact of homophobia. It's about a girl who through no fault of her own was cut off from her roots, most evident in being literally cut off from her family and whose now drifting about without a sense of belonging, alienated not only from the world around her but ultimately from herself as well. Someone like Xiaoen, who seems so in touch with her roots and in charge of her own world is thus almost a foil for Xingyuan, making her incredibly alluring and incredibly frightening at the same time.
In the end, this is why Xiaoen proactively seeking out Xingyuan is so important, Xiaoen is literally pulling her into her world, trying hard to show her that she's welcome as she is. It will take time for Xingyuan to learn to accept this (and thus to also learn to accept herself as part of that world) and will likely also involve a necessary breaking down of Xingyuan's seeming idolisation of Xiaoen by exposing her past and showing that she's not just Xingyuan's foil, but an independent human being on her own.
I can of course not guarantee that this is how the story will actually go, but I look forward to it nonetheless :)