WMG / She's the Man

Olivia knows that "Sebastian" isn't just Sebastian, but doesn't realize she is Viola

Before the shoe discussion, she is obviously already attracted to "Sebastian." But she only gets more interested after "he" expresses pointed interest in girls' shoes and where to get them. Due to the sheer improbability of what Viola is doing, and since she doesn't make the connection when meeting Viola later, Olivia probably thinks she's either transgender, or simply a transvestite. Later, her tone of voice when she says to "Sebastian" in lab that "wow, most guys would never admit that" suggests that she knows or suspects he either flat out isn't a guy, or at least isn't a completely gender-conforming one.