Been texting a girl for a week or so, great chemistry. We knew each other 10 years ago and just reconnected. Set up dinner for Thursday and she goes "Im not sure if now is a good time to tell you this, but I am dating someone and wanted you to know that first."

Is this a defensive mechanism? Should I just tell her I'm not interested in being friends and cancel dinner? Or should I play it cool like it doesn't bother me?