It's a very tough situation, but you're better off letting her go. If she doesn't have the ability to let him go fi she feels that he is using her for more than sex, then there's something more to it than you don't know.
There's plenty more around, and there's no use in making a huge deal out of something that can avoided. Friends could be lost, feelings could be hurt, and asses may get kicked. Seriously, man, a girl isn't worth that kind of trouble. Let her go, and keep looking. You were really reaching for reasons to ask her, anyway, and it sounds like she was only showing slight interest anyway.