Be firm, but polite when talking about work.
Other than that, be as friendly as you can in the lunch room or watercooler conversations. If you meet outside the office, avoid conversations related to work. Behave in the same manner as you did earlier.
If she expects you to recommend her for a promotion, but it is not possible, explain that you have limited power but will make your best effort.
She may not want to lose the friendship entirely, because it can have an adverse impact later.
I was in a situation where the new employee reporting to me was my husband’s senior’s wife. She was a refined and polite person, but asked for a change of department. I think it helped awkward situations for both of us.
The least you can do is to avoid being arrogant or supercilious. The rest of it depends on her level of maturity.
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