It depends on how this friend behaves toward you and your partner, given that you are in a relationship. If the opposite sex friend is too touchy and flirty, they are not respecting the boundaries of your friendship, and are not respecting your romantic partner. Clearly your romantic partner is picking up on signals of inappropriate behavior, and it's not unreasonable to ask that you limit your time with this friend.
If, however, your friend is not doing anything wrong, then your significant other is probably being too sensitive. I think you really have to examine your friend's behavior objectively to see if maybe there is something to your significant other's request.