I have to say, your post was one of the cutest things I've read in a long while. 'sticky wicket' haven't heard that in ages!
You sound like a real gent. And a very genuine, intelligent person, despite your lack of know how in the women reading department. ha, I'm joking but, you know, can people even read their own sex? I definitely can't even read some of the women i know, and I'm a woman.
People are just, confusing, male or female in my opinion!
But, It's looking good, I'd say. Trust me, I'm a psychologist to be!
we talked for 2 hours, she got a call from her mom took it, then called me back and we talked for another hour.
She definitely wants to talk, possibly get to know you more, catch up? Either way, it seems she may have missed you as much as you missed her.
So she's hesitant around you, she won't make physical contact with you. Now, she's a close friend, so we know she likes you, so it seems unlikely that she won't hug you because she doesn't like you (because she does!)or that she finds you threatening/unattractive.
Like you say, your behaviour towards her is non threatening, but maybe she interprets your body language as distant and so follows suit?
In my experience though, people avoid contact as a means of an emotional barrier. So it could well be that she likes you and doesn't want to let on. fear of rejection?
But then maybe she's someone who just doesn't like touching? I have a friend who hates me hugging her, at first i stupidly took offense, but then realised, it's not me she doesn't like.
I had a similar relationship to you, with one of my best male friends. He would never hug me, sit near me infact, even though we were so close, but that was all down to the fact that he liked me and I liked him. Nothing came of it, but if you 'investigate' your situation you may have better luck than me!
All in all, sounds promising. Take it slowly, and there's no need to put your friendship in troubled water if you just go about it the right way. Make an effort with her, let her know you want to spend time with her and see where that goes. If you never try, you'll regret it!
Love Gemma, (whose love life is in tatters and should take her own advice!) haha!