Well... Have you tried talking to your girl about how this friend makes you uncomfortable when they're around all the time? If you really don't like her friend, tell her that if she wants to hang out with her friend, that's fine, and to come see you when she's done.

You need to find out how she's feeling about you otherwise you're just wasting your time. If her friend is telling her things and THAT is the cause of the mixed feelings toward you, then that's retarded, because this friend just pops up out of nowhere, so he/she gets no opinion on your relationship with your girl.

Sounds like this relationship is fairly new, so maybe if you do end up cutting things off, you may be able to move on a little easier than, say, being in a relationship for 2 years or something.