Seems fairly simple. If you don't have feelings for the guy, then tell him. Sure, its not good to hurt people, but you aren't going to be able to go through life never hurting anyone. Just go tell him, in a nice, respectful and direct manner, no thanks. And don't take forever to do it. Go, get it done. The longer you wait to tell him the more likely he is to be hopeful, the more he will allow himself to feel things for you, and the more damaging it will be to him.
Far as your other friends desire to have romance with this guy, i'd stay out of it. That should be between them and God. If she wants him, she should speak up to him. But he has feelings for you, so putting yourself in that situation could backfire. So really, just stay out of it.