Okay I'm in a restaurant with some people from my school. A guy who used to go to our school was talking to my best friend. Her boyfriend was there with us, but he was talking to someone while the guy was talking to her and I was just looking around. So... she came up to me and said I told the guy I was gay and that you were my girlfriend. I just stood there and looked at her like "WHAT". Then I finally spoke and said, why did you do that? she said, I don't know just pretend we'll dating. Then I said your boyfriend is here, why didn't just say you had one. Then she says, oh I didn't think of that. So as we were in the restaurant I did what she ask me to anyway. The only thing I did was just put my arms around her, no kissing.
Pooh PoohGood morning, Pooh Pooh.
Dreams are like a fun-house mirror, most of the time. So the situations in them are reflections of real-life, but can't be taken literally. This is why you can dream about your best friend telling someone you're gay, when nothing like this would ever really happen to you.
The basic theme of this dream is, you're put into an embarrassing situation by a someone close to you. The problem you find yourself in, is based upon a lie, and there was no need for the lie in the first place. The emotion you feel - confusion - is most likely the same emotion you're feeling about the real-life situation.
The friend in your dream could even be a fun-house reflection of you - meaning that, you could have put yourself in this situation because of an unnecessary lie.
As nothing more uncomfortable happened than just a hug (no kissing), I'm guessing that the situation, while slightly embarrassing, does not cross the line into mortifying, and will likely have no lasting effects.