No worries, Olive; if I got offended by questions about sexuality, I'd be working in the wrong place, now wouldn't I?
I'm going to go ahead and give a short explanation of transgenderism and transsexuality, since it's something I like talking about and since others have been curious not just about my own situation, but about the issue in general.
It's a complicated subject, but in a nutshell, transgenderism is a condition in which a person's gender identity (their internal sense of being male or female or whathaveyou) is at odds with their physical sex. Some transgendered people find that they don't want to transition to the opposite sex, or that the idea of a binary gender system in which there are only two options isn't right for them. As an aside, I identify as genderqueer, even though I'm biologically female, because I feel very strongly that I'm neither female or male, but rather somewhere in between. It's a bit like bisexuality, if you will.
Then there are transsexuals -- those who experience that same sort of gender dysphoria, but decide to transition from male to female or female to male, depending on their biological sex. Some transsexuals do have sex reassignment surgery, in which their genitalia is altered; others choose to leave their genitalia alone and simply utilize hormone therapy to give them secondary sex characteristics such as breasts (for male-to-female transsexuals) or facial hair and a deep voice (for female-to-male transsexuals).
My partner has not had surgery, although she will most likely do so within a few years. So at the moment, she does still have male genitalia. She has legally changed her name to a female name and lives as a woman now, and these days, even I tend to forget that she was once male.
If you're really curious about the subject, you can find an excellent explanation of transsexuality here: http://transsexual.org/aprimer.html , or you can see if your library has a copy of the book "True Selves: Understanding Transsexuality" by Chloe Ann Rounsley & Mildred Brown. You can also toss more questions at me if you like -- I've spent a good bit of time studying the subject, and am always glad to discuss it.
Hope this helps!
Do not meddle in the affairs of dragons, for you are crunchy and go well with ketchup.