I think when she says he's not that much into her, she means it in an emotional level and sex doesn't necessarily depend on or come in the same package. She even mentioned they have sexual chemistry, so no red flag for me so far (I didn't get it if the OP associates physical intimacy to emotional intimacy or not from what she said)

What bothers me (almost to a personal level) is this "I'm not thaaat much into you, but I like you and I want to work this out" kind of relationship, but I hesitate commenting because I've never had relationships like this before and it sounds weird and unmanageable to me, even when it's rather common. I see people "working out" romantic relationship with someone they just got to know, so it's up to the OP and what she expects. If I were her I'd be feeling rejected and would probably go uninterested and back off forever.