All right. Back from work.
Okay, prepare yourself. This is going to be a long one.
As I said before, from what you've told me, it sounds as if you're heterosexual as far as your sexual preference goes. Now, I don't know when you met this guy, but it seems as if you've met him and became friends during your not-so-sure years. And if this is so, that helps to explain why he was allowed into your emotional corner as opposed to other guys after you made the realization that you're hetero.
I have a very open female friend (lesbian-turned-bi) who says that her love for someone (and I'm talking about the desire for companionship as well as sex) transcends her gender preferences. She's married to a pretty cool guy right now, but if the right woman comes along, there's a possibility that she might leave him for her. Though while her gender preferences are still open, you've pretty much closed off that kind of emotional attachment with other men when you made your choice, save for the one guy who got under your skin beforehand...
And now you're confused, because you love him, but you're not at all comfortable with the notion of a sexual relationship with him.
You've also made a comment about "going further" with women. My question: have you actually had sex with a woman? If not, how far did you go? You don't have to get specific (second base, third base, etc.)
I'm asking, because it leads to another question: are you against sex with other males, or sex in general? There's a significant difference with two different roads of advice.
Path One: You're open to sex, just not with other men.
In this situation, it would be totally unfair for you to try and cultivate a partnering relationship without seeing to his sexual needs. This means that the both of you will eventually either end the relationship out of frustration, or one (or both) of you will cheat on the other for sexual gratification.
Now, may people's opinions of sex will differ. Some are nonchalant about it and say that outside-of-the-relationship sex is tolerable, only if it's out of biological need fulfillment, and not out of love.
Others are more old-fashioned in saying that in a committed relationship, sex should only be reserved between the two of you as the complement to your relationship.
Where does your feeling lay? Where does his? You're right; he's going to have expectations, and if you don't want him fooling around with anyone else, it will end up being a serious problem.
In that case, the best thing for you to do is to back off the relationship and make it clear to him that you're not interested in being lovers, only close friends. And as close friends, you're not going to engage in any more lover-type behavior, such as spooning, caressing, holding hands, or sleeping together. Continuing to engage in these behaviors will only lead to more sexual frustration, and things may happen that the both of you may regret that will end your friendship. You never want to be forced into sex (whether against your will or willingly). You want it to happen naturally. And in this case, it will never happen that way.
Continuing with this behavior will wreak havoc on your social skills as a whole, and lead to more awkward situations with other people.
Now, I'm not saying that you need to conform 100% to society's views of heterosexuality, but as a species that's built to communicate with others, there are reasons why boundaries exist at every relationship level – and for every culture in our world. If you want to be just good friends (and this sounds like a friendship you should cherish), then you need to act like good friends, and not pseudo-lovers. This is a case where you really need to "do what the Romans do" so that you remain as socially acceptable in whatever circle you're in.
And when you step back in this way, you'll start to become less confused about what you truly want.
How do you approach your friend about this situation? Well, the best thing to do is to simply rip the band-aid off and get right to the point.
"Look [name here], we've been friends for a good long time now. But the relationship we're sharing right now isn't very healthy. You're gay; and I used to be, but not anymore. I value your friendship more than anything in the world, and I wouldn't change it for anything. But we can't keep going like this. It's not fair to you, and it's not fair to me. If we're going to be good friends, we need to just be good friends, and nothing more."
Phrase it anyway you'd like. But if he's truly your friend, he should be understanding and back off. And you need to keep your foot down and abide by these boundaries.
Path Two: You're not open to sex at all.
Now, this is a much more complicated answer that I'm not sure I can give you in one sitting... If this is the case, then you're sexual preference is really still in question since you've been "gay" at one point of your life and are currently in love with another man.
Sex is finicky for different people. If you've yet to have consensual sex, the apprehension and anxiety that comes before laying down with your partner is very understandable. There's self-confidence issues with it: "What if this person doesn't like how I look naked? What if I can't perform to his or her expectation? How on earth am I going to satisfy him or her? I've never done this before!!"
Communication with your first-time partner is key, and it's vitally important that you trust that person. You listen and respond to each other.
And you let it happen naturally. You never force yourself to have sex, nor do you nag your partner to do if if they're not ready. If you're not ready yourself, then don't do it. When the time is right, it happens, and the both of you will be in it.
But the area that has me really concerned is the fact that you were sexually assaulted as a child. This could indeed have profound implications to how you perceive sex later in life. The negative emotions involved can often be wrapped in layers of trauma that can't really be undone over the Internet. In that sort of a situation, I'd suggest talking with someone you can trust face-to-face about it. It doesn't necessarily need to be a psychologist (and that can get pretty pricey), but it's important to communicate your emotions to someone, and to have that someone respond to you so you can get to the root fear of why you don't want to have sex, and overcome it.
In that sort of a situation; even though you love your friend, I wouldn't choose him to be your "therapist" in this regard. There may be a conflict of interest in the sense that he's trying to get your clothes off before you truly come to terms with what's bothering you. Sure, you may have consenting sex, but the underlying problems will still be there, and the problem will never go away. Your sexual behavior will suffer, and sex could be something you associate negatively forever.
I don't know what kind of relationship you have with your parents. If you're close with either your mother, father, or other mentor figure, it would behoove you to talk to them about your anxieties, and maybe they can start you on the road to a healthy relationship.