So is it just that we have a lot of homosexuals on this website, or is it cause of the topic title having gay in it? Then again though, more and more people I know are admitting to being gay now, so I guess it's just because it's being more widely accepted and portrayed lightly in media?
Anyways, from a straight person's view, though I am a bit feminine at times (;o), a couple of my friends came out of the closet not long ago. One of them constantly goes into complimenting my appearance, though never touching me inappropriately. At times it does get a bit uncomfortable, especially when your preferences don't go that way, but as a whole, I've come to look at it as a normal occurrence. It hasn't been the first time and it probably won't be the last time that a person with homosexual preference comes onto me. I think the best way to handle it, is if your friend hasn't come out of the closet yet, then definitely don't try to call him gay or "help" him realize what he is. That is something he needs to do on his own. With the whole touching thing, I'd resort to acting a bit more reserved when he does that. I have a female friend who always used to hug me and try to kiss me on the lips as normal hellos and goodbyes. The way I handled it is I would just slightly move out of the way when she came in for the kiss or made the hug really really short and small. Mainly because I'm not very comfortable with public display of affection, or any type of serious affection when you aren't "with" someone. But the end result is that we are still friends, and she has gotten the hint that stuff like that makes me uncomfortable. If this friend of yours is really your best friend, gay or not, he will realize it makes you feel the same way.
And I know this is a way late response, but if the situation is still a problem, then I hope this helps in at least some way.
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"I used to think the worst thing in life was to end up all alone. It's not. The worst thing in life is ending up with people who make you feel all alone."
-Lance Clayton