I don't think it's time to cut her off altogether. Friendships are important and rewarding relationships in themselves, and I think it often makes sense to be friends with people even if you initially have romantic intentions that don't work out. 

I don't really have great advice for you. I can say from experience that making the shift from aspiring partner to friend isn't necessarily going to happen quickly, but it can be worth the awkward transition period. I would definitely suggest getting out and trying to date other women. Falling for someone new usually helps get over an old crush. In the mean time, just try to keep actively reminding yourself that it's not this guy's fault things didn't work out, and maybe try to limit how much time you spend with him. 

If you're in anguish for an extended period of time, though, you might want to consider the other commenters' suggestions and just walk away from the whole situation. 

Good luck!