shit or get off the pot.
you are flirting with her - I doubt it is even subconcious at this point. If you want her and think she would be better with you, then do something definitive about it. It will ruin your relationship with your friend, but if you think she's the "one," then you have to do what is right by you. Eventually, your friend will remember that the phrase, "bro's before ho's" cuts both ways.
If, on the other hand, you do NOT want her (as a wife) then start distancing yourself from her. You have no business talking with another man's fiance to the degree that you are doing - unless, of course, you want her.
Fiance is NOT married. All's fair until they say their vows.
You should also go hang out with your friend WITHOUT her around. Have the talk and explain to him the things you have explained to us. Do not sound like you are looking for weaknesses in their relationship.
To the guy who has a neighbor who sunbathes naked in full view of you when you come home from work and her husband is not home - she is looking for some. be VERY careful. That kind of stuff does not happen by accident. You may not be interested, but she is.
Matt