You sound as if you have some "confidence" but also a lot of insecurity which she has also pointed out to you.
If you are constantly going to doubt and not let go, then yes let her go because you aren't going to jump this at all.
Alternatively, let this all go and concentrate on making the relationship work between you both, gain more confidence and next time walk up to the guy and smile.
" (not mentioning me was because i'd asked her you're single etc right? and she didn't answer).
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