It was a disgrace. The case was eventually thrown out of court, and a mealy-mouthed NYT recantation was issued (linked in OP - it's a typical NYT non-retraction retraction).
There was other reporting at the time, from Robert Scheer of the LA Times, that contradicted the Risen/Gerth story. But the combination of the endorsement of the NYT, and the mesmeric hold of "national security" on peoples' minds, led to an establishment take that Lee had committed serious crimes. Scheer tells the story here: https://www.thenation.com/article/no-defense/
The whole affair serves as a warning about the dangers of taking selected "senior intelligence officials" at their word. We seem to need these warnings.