Presumably most people would agree that there are people who are confused about their sexuality.

"Confused about their sexuality" is a particularly uncharitable characterization of a transgender person. Many are not confused, rather absolutely certain. Unless you're using the term "confused" as a polite way of indicating that you believe such a person to be mistaken or delusional, in which case you would be begging the question.

By the way, gender is not the same thing as sexuality.

It would only be a counterexample to that model if the student was correct, but whether or not the student is correct is precisely what we are discussing.

If one models gender as a boolean switch that can be set to either "male" or "female", and encounters an individual who has a combination of "male" and "female" characteristics, their model may not accommodate the new observation. I have watched people (who I previously considered fairly sane) break into a yelling fit when confronted with someone undergoing a gender transition, demanding to know their "real" gender and hurling insults when the response was not what they expected.