Hmm, this sounds a bit familiar. I was the one who posted that "Personal Dilemma" thread about 2 months ago, where I'm currently happy with my current GF but couldn't get another girl out of my head. We had been work friends for the previous 4-6 months. I tried reading signs from her for a month or so afterwards, but that isn't always the best way. For one, the girl can send mixed signals quite frequently, and that just ends up making it harder to determine. Secondly, she might be confused herself and not sure what she wants.
I ended up being somewhat blunt to her about my interest in her near the end of last month. I wasn't asking her out, but just letting her know I was interested in pursuing something more than a friendship if she was willing. The result? She wasn't interested. I'm not 100% sure if she meant just with me though for a number of reasons. The two most important being one -- she's not interested in a relationship at all right now, and two -- she still acts really damn flirty towards me... in fact, it has increased since the talk. However, she also informed me of one thing that kind of turned me off to her in the relationship sense; she's a religious person, following a very cultish one in my opinion. Me, being agnostic, makes that a hard sell.
Now, given your situation, and that you have known her for years makes me doubt you would run into something like that. However, I would suggest definitely talking to her about it. Depending on how daring you feel, either ask her out straight up or do what I did and just let her know you would be interested in more. Yes, there will be awkwardness if she says no... How long it lasts depends on the two of you. In my case, it lasted less than a week and that was mainly my fault because I was trying to come to terms with the fact that nothing would ever happen with her. The timing was quite good, however, as I took a 9 day vacation about 5 days after we had the talk. We actually e-mailed each other almost daily during the vacation to sort some things out and since then we are becoming better and better friends.
I know I'm probably venturing into the dreading "Friend Zone" but meh, I like her a lot as a friend too. And yes, there still is that nagging little hope that someday something might happen, but it's not nearly as consuming as it was before we had the talk. Although it recently took a bit of a jump as I found out she's still a virgin.
Never had one of those before.
Anyways, just talk to her about it. If she's really a good friend, you guys can work through the awkwardness if it doesn't turn out the way you hope for. And honestly, in some ways it will become much easier for you, since you will not be hiding anything anymore.