well best of luck to you, as a fellow guy, even if he's gay he's still a guy and i think the best route would be to be completely direct with him, for example, "i think your cool and we can be buds but im not gay and thats that, sorry." simple yet direct, then again im not exactly the most graceful guy when it comes to explaining things ^^;; and i dont exactly have an award-winning personality either XD.

I think you may well be right there, pussy-footing around the problem with overly gentle words and indistinct sentiment just ends up hurting more in the long run, I'd rather someone was quick with it than dragged me out for ages, it would feel like you were being pushed away more. That said I wouldn't expect him to be altogether cool with you for some time.

I'm a loner my self but i always found it easyer to be rejected [by girls and soical groups] when they just strait up said it.

try introducing him to some other friends. If he spends time with more people it will have a positive impact on him, and he won't put all of his emotional burden on one person rather spread it out.

I've had friends like this. What I suggest is that you still stay in contact with him online, and slowly ween him from you. I hate to be mean to people, but annoying people I cannot stand for. First, just try logging onto IM less. Or maybe you could block him for periods of time and unblock to make it look like you are online less if that is a problem. He will get adjusted to not having you around as much. If he tries to hit on you or the like (I also have this problem being a bisexual male) just tell him straight out "Please stop, it makes me uncomfortable." If he doesn't stop, then threaten to not speak with him again.

Who knows, maybe after you ween him from you he will find more friends? If he does then he will definitely stop being naggy. I would also worry about him going back to how he was... But if he likes you that much he will listen to you when you tell him that it is a waste to revert back to his old ways.

Just trying to help.