I can understand your being hurt, yet I think you are fortunate in having someone who is attempting to be honest about his attraction to your friends. Maybe he is trying to let you know that he doesn't really want to be your boyfriend? If that is the case, let him go, no matter how much it hurts now, for it will only hurt more the longer you hold out hope for the relationship and the stronger that your feelings become for him.
As for self esteem, that seems to be the thing that you have to deal with primarily. You have to settle that issue before you can have truly healthy relationships with others. If there are things about yourself that you don't like that may be contributing to your low self esteem and that you can change, you may want to consider changing them. None of us can do anything about our height, but most of us can do something about our weight, although that can be a difficult task, I know.
I have been battling a weight problem my entire adult life, especially since my early to mid thirties. I have been diagnosed as gluclose intolerant (borderline diabetic), which runs in my family. A very slow metabolism also runs in my family. Whether that is related to the gluclose intolerance, I have no idea. My caloric requirement is extremely minimal and seems to decrease with age. One day I may be that little old lady who is able to survive on a cup of tea and a tea biscuit daily! (perish the thought, as I love food!)
I always feel better about myself, in general, when I shed the extra pounds, not that I abhor myself when the scale goes up, but I do have a better sense of myself when I am on the lighter side. My friends and loved ones accept me, though, no matter my weight, just as I accept and love others no matter their weight, as it should be.
I've tried many diets regimes. Currently I have had much success with Weight Watchers and their relatively new Points System. You count point values to servings of foods which is a bit easier than counting calories, but it is basically the same principle. In addition, due to my slow metabolism, I have to walk briskly 4+ miles per day to see results of a meager weight loss of 1-1.5 pounds per week. It's not always easy but the alternative is that I will get heavier and heavier as I get older. I also don't care to be so conscious of everything I eat, but if I'm not, I can easily eat just a little over my daily requirement and slowly gain weight without noticing.
Ideally, our self esteem shouldn't be so wrapped up in our self image, but I've never met anyone yet who isn't affected to some extent in that department, especially people who struggle with a weight issue.
In any event, you need to surround yourself with people who love and accept you just as you are and who also encourage you in any attempts at self-improvement. You also need to, in my opinion, reserve your romantic affections for someone who is genuinely and unreservedly interested in YOU, as a total person, and not settle for anything less.