Ha! This is a very coloquial expression for "like" or "is attracted to". Turissa, you're correct. If someone "digs" something, they really enjoy it. It is not impolite or derogatory at all, but it is very informal.
"to dig" is not to be confused with "to dig in," however, which is another coloquial expression meaning "to begin eating":
John digs in to his lunch with gusto. (Juan empieza a comer con entusiasmo.)
John really digs horror movies. (A Juan le gustan mucho las películas de terror.)
in your question, i was a bit confused by which one you meant. Your example with the woman, however, made clear you meant the second kind (gustar). To like something in someone means to like a quality or personality trait of that person. Your sentence has put together "to dig" and "~ in someone" to make "to like ~ quality someone has".
Jessnutt, culpa mía. Había visto antes 'dig in' usado con comida y pensé que era el mismo verbo en este caso y que 'in' iba con 'dig'.
Gracias a tu explicación me he enterado de que no es lo mismo 'dig (something) in a woman' que 'dig into a woman', como haría un caníbal. XD.