Everyone is saying go for it and tell her how you feel but there’s one small detail that everyone seems to be overlooking and that is this girl is in a relationship already.
This chick may flirt with you and lead you on quite a bit, but she is already in a relationship with another dude. If a girl is taken she will reject your advances, if not at first then she will once you attempt to escalate the situation. You can approach her if you want to but again, she may reject you and if so then don't take it personally. And if you do approach her and she responds positively while she’s in a relationship then IMO she isn’t worth it anyway because she can’t stay loyal to her current boyfriend. If you’re rejected, don't worry about it, there are literally millions upon millions of girls in the world so run your game on them and you may have another chance with this chick later on when she becomes available.
At this point, I wouldn't recommend asking her out just yet since she's dating someone but that doesn't mean you can't flirt with her. When she flirts with you, flirt back. Small talk with her and joke around with her. Tease her. Flirt with her every chance you get.
As for your friend, he shouldn't get upset that you're talking to a girl because well, she isn't HIS girl! lol...there's no reason for your friend to get upset at you for moving in on a girl, however, her boyfriend may get upset and probably kick your ass or at least threaten you.
My advice, wait it out and make your move when she breaks up with her boyfriend because at this point the timing just isn’t right considering she’s content with her relationship status.