Yes, that was defiantly a mistake.
Look, I will put it this way, If you were crazy about someone would you just sit back and let all the shit happen when you know you could be doing something about it? I know I wouldn't.
I really don't want that to happen.
If you have lost your heart to her than you have to fight for her.
Tell her You have chosen her and you are not going to hide your feelings from anyone. You hav e told your ex-friend that you want her.
I'm afraid that you are going to get hurt because she seems to have some feelings for him or she wouldn't have to tell you about making a choice.
Go for her but be prepared to lose them both!!
Good luck..