Can my company keep me from getting another job from within it?

TLDR at the bottom.

I am a department supervisor in a large retail chain store. I left my job as a field tech in the company to come back to the store and be a supervisor back in September and ran into a department that fudged all of their numbers. They were in the top 100 in the company for what they do and now they we are in the bottom. There were several things going on that the last supervisor put in place (who is still with the company in a different store) that would get him fired if exposed but kept him in the top rankings of the company.I put a stop to the cheating immediately after I started but doing that meant my whole team had to be retrained and some we had to get rid of and re hire.

I applied for another job within the company where I can work from home and It's also I job I've done before and was successful in. I should add that this job is on the same pay level so it wouldn't be a promotion or demotion. It's just a lateral move. One of the higher up market managers called me Monday and told me that they probably wont let me move because of my performance and the fact that I will be on a performance plan soon. Basically that means they are giving me 3 months to fix my department or I will be looking for another job.

So I'm trying to figure out the best way to handle this. If they keep me from getting this job do I have any legal recourse? She told me to tell her when I get an interview so she can "downplay it" but I don't know if that's a smart thing to do.

TLDR: My manager tells me I may not be able to get another job within the company because of my performance. I did very well in the job I applied for and most likely will be the most qualified candidate.