Ah... the whole, "Bro\'s before Ho\'s" ideaology. Well I\'ve never encountered a situation where me and a friend were into the same chick, but I have blown off my friends for a girl so many times. Its definitely one of my vices; but I always expect my friends to understand my reasoning.
Honestly though, she likes you. It may be so that you\'re friend may be in love with her, however if she doesn\'t feel the same way at all, then its time for him to move on. You have got to talk to him though... don\'t wait any longer, and just tell him how you and the girl feels. Keep in mind, that if you and this girl does hookup, undoubtedly your friend will develop a chip on his shoulder. This is all the shit you have to realize you\'re now risking by getting involved with this girl. Do whatever is most important to you.