I am just going to put this here, but you are in the situation so you know best.

I knew a girl in college who was constantly at the doctor for her vagina/vulva, it was red and inflamed a lot of times and she was very confused and concerned. She even thought she could be being sexual assaulted in her sleep by the person sleeping in her dorm room. It was so bad and irritated. She went to several gynecologists, no one had answers, it just appeared to have scratches and be inflamed. She went to a sleep specialist because of her anxiety (nothing related to the vulva/vagina stuff) and she slept in a controlled environment for a few days. They found out she masturbated in her sleep. She always had long nails and that's what was causing it to always be red and inflamed. She got her sleeping meds, cut her nails and from the meds alone it appeared to help this.

I've also heard of a guy who did this too but in his ahole. Some people do masturbate when they sleep. But, again, you saw it happening you know it best.

Have a serious talk with her if you think she is just lying. This is affecting your mental health and there is nothing to be ashamed about, maybe even talk about masturbating in front of each other as foreplay if you are into it. But explain that you don't find it weird or off-putting, you even find it healthy and sexy. But the lying is getting to you and that is unacceptable.