You're not being an emotional nut case.

You're just in an impossible situation.

You love him. He doesn't love you. You're holding out hope for the impossible.

Of course this is going to hurt and it's going to keep hurting while ever you keep him around and continue to feed your hope.

The only answer is distance. While ever you're being all close and fuzzy you aren't going to be able to move on.

You don't need to shut down the friendship completely but you do need to find other people to spend time with.

If he is as understanding as you say he is I'm sure he would understand if you explained to him that you need some space.