Laura Robinson, who is being sued over the article published in the Georgia Straight newspaper last year, argued the security was needed to ensure Furlong would be able to pay if he eventually loses the case.
But a B.C. Supreme Court judge concluded Robinson failed to prove Furlong lacks the means to pay or that his lawsuit is frivolous.
"There is a genuine issue in this case as to whether the plaintiff was damaged by the article and, if so, whether the defences raised by the defendant will be made out," Judge Gordon Weatherill told lawyers for both sides on Tuesday.
"The action is neither trivial nor frivolous."
Robinson's failed application is the latest development in what has become an increasingly hostile fight between a freelance journalist and the man who became the public face of the 2010 Winter Games.
Robinson's article, published in September 2012, quoted several people who claimed to have been verbally and physically abused while Furlong taught physical education at schools in Burns Lake, B.C., and Prince George, B.C., in the late 1960s and early '70s.
Furlong denied any wrongdoing and filed a lawsuit against Robinson, condemning her as a reckless activist bent on destroying his career.
The Georgia Straight was originally named as a defendant, but earlier this year Furlong dropped the newspaper from the case and is instead focusing his efforts on Robinson.
Robinson has included additional allegations involving Furlong's former wives in subsequent court filings, prompting Furlong to accuse her of abusing the court process.
None of the allegations against Furlong or Robinson have been tested in court, and this week's hearings did not specifically address Furlong's libel claim.
Robinson's lawyers have indicated their main argument will be that the article amounted to responsible communication, a new defence created by the Supreme Court of Canada in 2009.
The responsible communication principle allows defendants to fend off libel lawsuits, even if they've published incorrect information, if they can prove they acted responsibly.
Furlong's lawyers have alleged Robinson acted maliciously and therefore is not covered by the responsible communication defence.
Robinson's lawyer, Jeremy Shragge, told the court earlier this week that his client wouldn't be claiming the allegations contained in her original article were true. On Tuesday, he clarified Robinson will, in fact, be arguing the article's contents were accurate.
Shragge also used this week's hearings to repeat Robinson's complaints that Furlong is not doing enough to move the case to trial.
Shragge said defence lawyers have already booked a 19-day trial for January 2015, but Furlong has yet to respond to the requested trial date. Either side could request a jury, but that hasn't been decided yet.
Furlong's lawyer, John Hunter, declined to comment as he left Tuesday's hearing.
Furlong issued a brief written statement welcoming Tuesday's decision but providing no details about when the case might make it to trial.
"I have no intention of paying her a dime and look forward to rebuilding my life and the successful public speaking business I was operating before Laura Robinson started her public campaign against me," the statement said.
Note to readers: This is a corrected story. A previous version incorrectly said Robinson's lawyers had proposed a trial for February 2015
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