She was co-creator of the show. he said:
Ms. Winstead, who said she "is in her 30's," is as famous for leaving The Daily Show as she is for creating it. In January 1998, she walked away from the show after the host Craig Kilborn told Esquire , "To be honest, Lizz does find me very attractive. If I wanted her to blow me, she would."
http://www.observer.com/1999/lizz-winstead-returns-and-so-does-marv
In a quote that was labeled a joke in the article, but which had none of the female members of the show's staff laughing, Mr. Kilborn called Ms. Winstead and other women on the show a derogatory name and then suggested that she liked him and would perform a sex act on him if he wanted her to.
http://www.nytimes.com/1997/12/17/arts/tv-notes-comedy-host-in-hot-water.html
They did not get along at all, so any idea that he was just joking didn't ring true.
They're both from Minnesota. I remember see Winstead working the door at one of Scott Hansen's comedy clubs in Minneapolis in the 80s and then seeing her set.