Well, I remember a story about my parents' friend who is a pastor (and a good one too, met him on several occasions and have a lot of respect for him). He had just been moved to a new church and there was a lady who was a regular attender and shacked up with her boyfriend. And the story goes that he did speak to her about it, only to find out that no one had ever told her that that was something she shouldn't be doing as a Christian.
So before jumping to the conclusion of, I must shun you because there is sin in your life and you don't seem to have a problem with it, find out how much this person actually knows the word of God (not a direct frontal assault, but just talking about the Bible and what it says and how it has impacted your life) and also find out the trajectory of their faith. It may be possible that God is working this person through a lot of other stuff and this sin isn't on God's priority list to deal with immediately or you may find out that this person thinks being a Christian basically means being a nice and decent person.
I will wholeheartedly agree that as the church and people of God we should be up in each other's business and confronting sin (at least once we have established that loving each other relationship and are truly part of each other's lives). But the point of pointing out sin, is to help people find a way to live in God's freedom and let God restore their lives, not to keep all those sinners away from God's people so we don't get tempted or offended. Oh and in dealing with situations like these, we need to remember that these are real relationships with many good points that have fallen into an area of sin, not sinful relationships that must be abandoned because there's nothing good in them. If the first impression a person has of becoming a Christian is that God doesn't approve of all the people you are closest to and wants you to abandon them because they aren't good enough, why would anybody stick with Christianity for long?