Homosexuality is a newly emerging research trend in medieval studies (part of the larger field of queer studies). It often includes studies of transvestitism, which applies to the story you mention in the post. Specifically regarding transvestites, Joan of Arc is probably the most notable one, though no one was in doubt of her gender. There's also the fictional Pope Joan, found in Martin of Opava's Chronicon Pontificum et Imperiatum written around 1250. There's also stories of bearded female saints who asked God to make them male in order that they might better preserve their chastity, since no man would desire another man (St. Wilgefortis is probably the most well-known). I cannot speak specifically about the story you're interested in, but there is certainly historical precedent for cross-dressing and transvestitism from the middle ages.

Here are some sources you can go to for further research:

Clothes make the man : female cross dressing in medieval Europe by Valerie R Hotchkiss (Garland, 1996)

Becoming male in the Middle Ages by Jeffrey Jerome Cohen; Bonnie Wheeler (Garland, 1997)

Riddles, knights, and cross-dressing saints : essays on medieval English language and literature by Thomas Honegger (Peter Lang, 2004)

Lieutenant nun : memoir of a Basque transvestite in the New World by Catalina de Erauso; Michele Stepto; Gabriel Stepto (Beacon Press, 1996) -- this is probably most helpful for you, because it's the story of a woman living as a man for most of her life, and it wasn't discovered she was a woman until she was on her deathbed.

Hope this helps a little. Happy reading!