First time poster here. Figured you guys might be able to relate with and possibly give advice with this "friendzone" type situation. If this isn't appropriate for this sub, maybe someone can refer me elsewhere.

Background, I'm 43, had decent if not great luck with women in my 20s including 1 5-year relationship. Never been especially attractive, and almost anyone I hooked up with started as a "just friends" situation. In the last 15 years, my sex/romantic life has been nearly completely barren. I have a few guy friends but we barely ever talk anymore, and definitely not about anything serious.

I've been hanging out with a woman my age for a few years now. We initially talked, because both of us have had substance-use related issues in our lives, which brought us a bit closer, and she did try to help and at least listened to my problems. I also discussed my female-related sadness, as this woman had been in a committed relationship for a few years with a guy I know, so I was not trying to pursue anything. There was one odd time while she was on a break from her man, where she stripped for me and we made out. At least part of this was in exchange for some pills, but it was something I would've sold for like $4, and the trade-aspect got brought up while things were already happening, and things continued without me offering more or her asking for more.

That was a few years ago, we drifted apart after a while but in the last 6 months or so we've became very close friends. She has a man she is off and on with - he's abusive at his worst, and an asshole at best. We started texting and talking a lot, and I would help her with things her man wouldn't - shit like taking her to the grocery store when her man wouldn't (I did not pay), driving her to pick up scripts, etc. A couple times I took her out to a fairly nice restaurants (ie on her birthday) and did pay, with no reciprocation. We at least text daily, and have gotten close emotionally. I've told her I find her attractive, and want to fuck, but that I haven't made any moves because of her on-off again BF. Things did get pretty flirty now and then though.

Recently, she's been getting to me. Our conversations have turned more into hearing her talk for a couple hours, barely able to get a word in, and it's intense conversation. It leaves me feeling drained, while she tells me how great it was to hang out. The other night in middle of her talking, she said "I hope you realize you are never going to have sex with me." I at first tried some type of comedic reply, not taking her too serious. But she continued saying that I had to know this. Unfortunately, I lost my cool and said "yes, i get it, i'm not a good looking guy, and you find me ugly and unattracive" (i'm 5'8, very little muscle, and 230lbs). This made her upset, saying that she didn't think I was ugly, and she felt like I only wanted to be friends so I could maybe fuck her. I told her I wouldn't have wasted this much time on her if I didn't like her as a person. Argued a bit then we got off the topic for the rest of the night.

Next day, she texts me how good she feels that we talked about it. I told her I didn't feel very good about it. This all went down on the night of the 23rd, so now she is occupied with holiday type stuff. I don't know what to do. Her friendship has been fairly draining on me lately, but she's also the only person I really talk to. I've known that it was unlikely to progress in any sort of physical direction, but now that she has explicitly spelled that out, I feel like shit. I know I should cut it off completely, but then I'd just be alone. It's also confusing since so many of my past encounters started out in a similar way, but did lead to sex (I like to think that her saying we will never have sex is her trying to convince herself of that, but that seems unlikely.)

I feel like I need to say something to her about this, but don't know what. She's also having a rough time with unrelated things, and I do care about her and don't want to leave her hanging.

TLDR - Stuck in a "friend zone" type close friendship, know I should walk away, but would be completely alone if I did, so don't know what to do.

Edit: Thanks for the replies, I will definitively keep them in mind.