1. are you in love with her? if no go to 2. if yes go to 3.
2. meet her face to face (without your mate) and tell her that you find her attractive, you enjoy flirting with her, and you like her as a person but you are not going to date her and you are double not going to sleep with her. she will probably get the shits as she will feel you are rejecting her because of some reason that is not related to the fact that she is your best mates sister and you are not going to take advantage of her. be honest, be kind, be firm, then begone. dont get sucked in to 'talking'/arguing about it because there is not much more to say. dont worry about what your mate might think, just go see him after you see her and tell him that because you respect both him and his sister you are not going to bone her then ditch her. things might be weird for a week or two - suck it up. it wont last long and she'll be right in no time.
3. tell you that you are in love with her and ask her to be your girlfriend. if she says yes you have reached the end of this book. if she says no go to 4.
4. if she says no its probably because she was flirting with you as much for the attention and self esteem boost as any actual attraction she might have for you, and by you coming out and telling her how you feel she will freak out because its no longer a game and she will suddenly realise she has been playing with your feelings and got herself in too deep. if you want to be nice about it go to 5. if you lose your cool and feel like letting off a bit of steam go to 6.
5. have a pre-prepared exit line. some examples include: laughing it off and pretending you were joking, perhaps saying something like 'damn what am i going to do with the wedding ring/tattoo of your name on my butt/vibrating condoms i got'; catching her off guard by saying something like 'i really appreciate your honesty and i am glad that you have stopped it here because if we had gone any further and you didnt love me things would have become really awful'; say something like 'ok phew, because there is this other chick that i really like too and i wasnt sure what to do but now i know you dont want to be my girlfriend i am not stressing out anymore. actually i am glad, because i think i really do love the other girl.
6. cut loose, do your block, then bail before her parents call the cops.