[...] Did you see Mellyagraunce When Launcelot stood by him? what white fear
"Curdled his blood, and how his teeth did dance, His side sink in? as my knight cried and said: 'Slayer of unarm'd men, here is a chance!
"'Setter of traps, I pray you guard your head, By God I am so glad to fight with you, Stripper of ladies, that my hand feels lead
"'For driving weight; hurrah now! draw and do, For all my wounds are moving in my breast, And I am getting mad with waiting so.'
Guenevere reminds her listeners how scared Mellyagraunce was when Launcelot challenged him to a trial by combat. (Maybe you've seen a trial by combat in shows like Game of Thrones. It just means that instead of having a regular trial with a judge and jury, two men fight it out in single combat, and whoever wins the battle wins the trial. Doesn't exactly seem just to us, but hey, the Middle Ages weren't perfect.)
If Launcelot won, Guenevere would be off the hook. If he lost, she'd be burned at the stake as an adulteress.
She recalls that Launcelot taunted Mellyagraunce and accused him of "sett[ing] traps" and "stripp[ing] ladies."
So Launcelot, at least, might think that Mellyagraunce was just setting Guenevere up with the whole blood-on-the-bed thing – he was "setting a trap" for her.
(According to one version of the legend, Mellyagraunce set a literal trap for Launcelot – a trap door in the floor that made him fall through into a dungeon.)
And making Guenevere bare her shoulder to expose a knife wound was a very unknightly thing for Mellyagraunce to have done – it made him a "stripper of ladies."
In fact, Launcelot gets so riled up just talking about it, he says he's going "mad" or crazy from "waiting."