Talk to her.

You smile comfortingly. "Obviously, this ring isn't just changing your body, but your psychological state as well. I'm guessing, just like as a dude you're straight, as a girl you're also straight, it's just that it seems weird since you aren't used to it yet. Obviously you don't have to get used to it since you can just take off the ring, but if you wanna keep using it, you'll probably get more comfortable eventually."

She smiles back and pulls you in for a long hug. You try to control your erection, realizing that this moment shouldn't be ruined by anything sexual. When she finally pulls away, she grins.

"I guarantee I never would've done that as a dude. Nice dick by the way."

Your face heats up as you realize, of course, there's no way you could've hidden your erection, it was probably pushing against her the whole time. The weirdness of the situation hits you both and you start to laugh, building in intensity as you both reflect on the ridiculousness of the past events.

Once you both recover, she looks at you quizzically. "I just thought about what you said earlier, about keeping using the ring, I hadn't considered that before. I mean we've still got our normal lives to live, college and shit, but now I guess I have to fit this ring in somehow. I mean, I don't know when or why I would want to change into a girl, but now I have the option..."

You glance over to your bedside table. "Speaking of having the option, I should probably see if my ring does the same thing to me. I think it would since it has the same inscription but I'll have to check I guess."