She opens up to me, which she doesn't do to anyone else, and I feel privileged she does. I always try my absolute best to be there for her when she needs someone. I cant stand to see her upset.  

I know she must feel a bit smothered by everyone, as theres so many people who rely on her, so many friends who are so attached to her, and shes too selfless to ever say anything or ever hint she wants some alone time. So I do try and hang back a fair bit, but its difficult to do that whilst at the same time wanting so badly to tell her and show her what she means to me.

I told her how I felt. She didn't feel the same way back, but she couldn't have been more sweet and understanding about it.

One of my best friends likes her too, and everyone thinks she likes him too. but he wont act on it at all because of me. Ive told him that it doesn't matter, and that she and him deserve happiness and each other, and not to worry about me. But he refuses it completely. He says he knows it would crush me (which it would) Ive tried a lot to convince him Ill be ok, but he just says to forget it, and its out the question.

I know how terrible I feel about it, and I just feel like im causing those two pain as well now. She deserves to have someone more than anyone, and as painful as it would be to see her and my friend together, I dont want to be the one to stand in the way.

I don't know what to do, I just feel shit about the entire thing

With this kind of situation, it seems almost impossible for everybody to stay happy. Somebody's bound to feel bad, if not two or all three of you. As of now it seems you've faced the main problem, and that is attempting a further relationship with the girl, and since that didn't work out I can see how it would really suck for you.

I think you'll feel better if you live life as you can, work through the feelings that come from your rejection--I know there must be some bad ones even if she was so sweet and understanding--and try to stay strong. You will feel better eventually, because your friends will work out their own issues as best they can and you will see new hope in a different girl. You're not standing in their way, because you've been honest and respectful the whole time...it's just a problem of conflicting desires, desires that can't consciously be changed.