I thought Picard made it pretty clear why he still held that grudge. He and Phillipa Luvois were lovers at the time of the Stargazer court martial, and even though it was her duty to go after him, his belief was that she actually enjoyed destroying his reputation during those proceedings, which she clarifies, but which he calls her out on with razor-sharp accuracy:
PICARD:
My God. Phillipa Louvois. And back in uniform. It's been ten years, but seeing you again like this makes it seem like fifty. If we weren't around all these people, do you know what I would like to do?
PHILLIPA:
Bust a chair across my teeth?
PICARD:
After that.
PHILLIPA:
Ain't love wonderful.
PICARD:
So, what are you doing out here?
PHILLIPA:
I am in charge of the Twenty third Sector JAG office. We're brand new. I have no staff but one terrified little Ensign. Hopefully we can make some good law out here.
PICARD:
Anything is possible. So you came back to Starfleet.
PHILLIPA:
Still the most exciting and worthwhile place to be.
PICARD:
You had no reason to leave.
PHILLIPA:
They forced me out.
PICARD: No. That was your own damn stubborn pride.
PHILLIPA:
When I prosecuted you in the Stargazer court martial, I was doing my job.
PICARD:
Oh, you did more than your job. You enjoyed it.
PHILLIPA:
Not true! A court martial is standard procedure when a ship is lost. I was doing my duty as an officer of the Judge Advocate General.
PICARD:
You always enjoyed the adversarial process more than arriving at the truth. Well, I hope you've learned a little wisdom along the way.
PHILLIPA: You know, I never thought I would say this, but it's good to see you again. It brings a sense of order and stability to my universe to know that you're still a pompous ass. And a damn sexy man.
...that whole bit about "enjoyed the adversarial process more than arriving at the truth" is the central arc for her story in the episode while they again find themselves in a courtroom, this time trying to decide if Data is a person with rights. Picard and Riker believe so and Luvois doesn't seem to have any compunction about setting Picard and his Number One against each other, further proving Picard's point.