How should I treat this person (Please read)?

Okay--This guy, I've known for a few years seems to be coming onto me. He always wants to cuddle and touch and wants my approval for everything. But he's gay.

Or, at least I think. He's always identified as homosexual until the last year. Now he has a long distance relationship with a girl, who pretends to be a guy through FaceBook. Yes, weird. But whatever.

Now he likes to look like a girl and refer to himself as a girl. But he doesn't want to be a girl. He says he likes having a penis and he doesn't want to be female. But he doesn't actually like looking male and got his hair styled a feminine way and shaves himself to try and be as hairless as possible in his body and he dresses on the verge of female--Blouses, v-necks, clothing designed to give the impression of cleavage and an hourglass, but not skirts or dresses, though he really wants a corset.

Kicker? I'm a lesbian. I'm not interested in men at all, sexually. But he really seems to try to get me to see him as a girl so that we can be together, even though he has his weird facebook girl-boy friend. I outright asked him if he was attracted to me and he said yes and that he would love a relationship with me.

But I'm not butch. I don't pretend to be a man nor look like one. I'm not a super girly type but I'm a definite female. I'm a DDD, it would be hard to look like a dude. XD

I like him okay as a friend. He's kind of an attention whore, but he's sweet and socially awkward. Now that I think about it, he got his hair cut like mine, so I'm not sure if he is somehow idolizing me or something.

But the thing is, if he said, "I want to become a girl" I would treat him as female. But he doesn't want to be a girl, but doesn't like being a boy, except for apparently his penis, and still wants to be treated as female in large part....

This is just beyond my comprehension. I'm a very empathetic, understanding woman. But I got nothin'. He really seems to think I can understand him and seems to think of me as just so wise, but I'm only a year and a half older than him at most! And I'm not even 20 yet.

How do I treat him appropriately without making him think I'm somehow interested?