Why would a prospective advisor ask if I'm meeting other advisors?
One reason an advisor might ask this question is to know how time-sensitive the decision process is. If you're not considering other advisors at the same time, there is no competition and the potential advisor can spend some more time making her decision.

Another reason might be to gauge your interest in her research activities based on the other people to whom you're talking. Are you looking only at her field or are you looking more widely? Since you're coming from someone else at the same university, she'd likely be using such choices as a means of determining your level of interest in what she's doing. In other words, she probably wants to know if you're just looking for any advisor, and she happens to be someone you're talking to, or looking at her as a serious option.