I have "oneitis"

Yes, unfortunately, oneitis has infected me - for those that don't know, it's basically having a hang up on one girl when you've been rejected. Anyway, allow me to explain (sorry for the walls of text):

I'm 19 btw. I met this girl at Uni, she was taken at first, then she became "available", knew I liked her, and we struck up somewhat of a rappor. Our mutual friend told me that she liked me, and so I asked her about it one night before the end of Easter term. She said she wasn't sure as she was still "broken" from the relationship with her ex and needed to think over Easter. We talked a lot over Easter but I let her think about the situation and didn't ask her about it.

About a week back after Easter, I asked if we'd gotten anywhere and I was (to my actual surprise) rejected. It was quite crushing as I really thought she was the girl, and this was the only time a girl had even looked at me twice, so to get so damn close and get rejected was quite crushing. She gave me various reasons - she'd end up taking me for granted etc, and I honestly don't believe she was just fobbing me off (she said she did find me attractive when I questioned whether she just wasn't attracted to me). She also said she didn't want anything too comitted right now as her last relationship ended in a botched semi-engagement.

So she's currently having a casual thing with this guy she met, which of course made me feel kinda bad and a little self-loathesome as I for a while constantly pondered whether she went with him because he was better looking, and had a lot of money but I stayed these thoughts as I saw her as better than that.

Present day: it's 2 months later and I still don't feel as though I've moved on much. We still talk a lot and there's no way I want to cut her out of my life because she's a great person and one of the few girls I've really truly connected with. In the last week or two I've kinda tried to move out of the "puppy dog" phase and I've been a bit more argumentative and stuff which has helped, although there's just one thing that keeps bugging me, and I know people might jump to conclusions.

Basically, we're VERY honest with one another, more honest than I am with anyone else, and so we've had a number of discussions about sex. It came into conversation that she's had sex with her current boyfriend, and this is what really bugs me for some reason. Every time I think about them together in that way it makes me red in the face and quite depressed. Now, I know that makes it sound like I'm just into her for her looks and sex and stuff, but I assure you that's not true. Sure, I think about her in that way, but, I value her personality far more, as she has what few women I've met have. Maybe the thought of me getting so close to being with her and then just having the shocking crush is still something I'm recovering from, but the thought of being that guy, in a physical and emotional sense, I mean, to be replaced by a guy she tells me she's not even that happy with, is a massive frustration.

Conclusion: I need to laid, but I want it to be with someone I care about without any of the above complications. This girl meant (and still does) everything to me, and basically I'm asking how I can bury these feelings and just like her as a friend? I won't cut her out of my life and basically I just want to stop feeling sad when I think of her and I not being together, and moreso (as I find it kinda strange) when I think of her being intimate with this guy.

Thanks, and sorry for the wall of text.

The problem is that I don't want to walk away from her as a friend. I guess taking a healthy step back may be a good idea.

been there.

walk away from it now.