Did it. Thanks for the advice everyone. In case anyone else has this problem, I shall summarize the steps
First you fight the handmaiden three times. Last one culminating in the fight you can use the shields.
Then the exile gets dressed.
Then the exile tells Handmaiden to get dressed and she puts on the jedi robes. And the exile talks to handmaiden about her mother.
(If you seek to train her at this point, she will agree to, but doesn't make the switch)
So instead of offering to train, the exile should go talk to Kreia, who says dont train Handmaiden. (I said no problem, I wont do it) Then you say you are going to leave and Kreia tells you no really, do not train the handmaiden.
Then go back and try to fight the handmaiden, she says nothing more to teach. Exile then offers to teach. Now there are different conversation choices and the "Betrayal" cut scene kicks in.
Clearly Atris thinks handmaiden betrayed her. But does Kreia think I betrayed her? I guess time will tell. Will I regret training the handmaiden?