Most Helpful Girl
She's using you for your affections. Basically, you are giving her the boyfriend experience without the emotional liability. If you are looking for a relationship with this girl, I say run!
She has emotional baggage. Not that you can't overcome something like this in normal circumstances, but it's clear she is not ready to be in a relationship. She liked this other guy, and when things fell through, she came running back to you to get what she wanted. And she has admitted that she is not over a relationship that ENDED 5 YEARS AGO! :S Big red flag!
Maybe this other guy saw what you are missing. This girl sounds like trouble. She needs to work out her issues before she dates again. Perhaps part of her problem is that she is chasing affections from guys without dealing with her issues. This prevents her from moving on entirely.
Someone once told me that you need to be okay single before you are able to date someone. I think that really resonates with this situation. She obviously has a hard time being alone. She needs the affection. But she is afraid to deal with the emotional issues that are haunting her from her past relationships.
I think you need to move on. She has already told you that she doesn't want to hurt your friendship. She sees you as a friend. That's the problem, and I personally would just let her go.
Find a girl who wants to be with you. There are plenty out there :) And you deserve to have someone feel for you what you feel for them.