Her manager, Rick Yorn, told the court that the pictures and video recorded by Rutter had an "S&M type of theme". He said: "It felt to me, right away, that he was trying to extort money."
Mr Yorn said that in a meeting he held with Rutter, the photographer had threatened to sell the photos to publications all over the world.
He later added that he was "deeply concerned" about the actress's image because the Shrek 2 film she was then working on was aimed at children.
Rutter's attorney, Mark Werksman, showed Mr Yorn a July 2003 photo spread in the men's magazine Maxim in which the actress posed provocatively with her Charlie's Angels costars.
Mr Werksman suggested that the spread was as lurid as the 1992 pictures. Mr Yorn said the two sets of photographs were as different as "apples and oranges".
Mr Werksman said Diaz was an actress ashamed of her past who was able to persuade the Los Angeles District Attorney to prosecute Rutter because of her celebrity status.
Rutter, 42, is charged with attempted grand theft, forgery and perjury.
If convicted, he could face up to six years in prison. An extortion charge has been dropped.
The judge has issued a permanent injunction prohibiting Rutter from distributing the pictures. Diaz is also suing Rutter in a pending civil case.