Psychologist Frank Moncher was asked about the difference between spiritual direction and psychotherapy as it relates to a new document released Oct. 30 by the Congregation for Catholic Education: "Guidelines for the Use of Psychology in the Admission and Formation of Candidates for the Priesthood." 

His distinction not only provides insight for seminarians, but also helpful information for the general public seeking spiritual direction:

 

In brief, the role of psychotherapy is to free a person from any privations or pathology that might encumber the exercise of their will.
In other words, the psychologist's work is about clearing the path so that a person can pursue their desires in life most ardently.

This is then where spiritual direction proceeds, to guide the discernment of the person so that they pursue true goods and holiness.
Nevertheless, as the document states in paragraph 4, formators are responsible for natural level aspects as well as spiritual aspects of a candidate's development, so coordination between psychologists and formators can be helpful.

Further, in the real world, spiritual direction and psychotherapy naturally occur simultaneously or even in the opposite sequence. In situations where a psychologist and spiritual director are working as a team, in my experience, it is not difficult to keep the roles clear with regular communication.

I should mention, however, that there is some danger for psychologists who are formed in a different psychological and/or faith tradition. I am aware of some who explicitly state that their model is to blend therapy and direction in the same process, not distinguishing the two, which I feel risks less than optimal progress in both areas.