Why is he still asking me out even though he know his friend is kinda dating me?

I met this guy online and I think he is pretty decent. We went out couple weeks ago and then we went clubbing with his friend and my friend.

The strange thing is that his friend wants to hang out with me too? It's funny though. His friend went to the same school as me and we lived a block away from each other. I told him since we live so close, I can come over his house anytime and play games as a joke. He also asked me when we're going to hang out.

He asked me what's going between me and his friend and that we sound kinda dateish? He knows some stuff about me because his friend has been talking about me to him and he knew that I am going out to watch movies with his friend, yet his friend is still insisting on hanging out with me. he even danced with me in front of his friend which I thought was quite strange because he knows that I have been going out with his friend (the guy I met online). Why is he still asking me out? o.0 He only met me once and he wants to ask me out and he should know that his friend is asking me out too?

Because you haven't said no.

When he asked what's going on between you and his friend, what did you answer?
Also, why do you think he should know that his friend is asking you out too? (Assuming that you didn't tell it straight forwardly when he asked)
How good friends are they?
Are you sure that he wants to hang out as more than friends with you?

I am guessing his friend hasn't said that anything serious is going on between you two, so the guy still thinks it is fine to ask you out. I would examine more your relationship with the friend first. I just have a feeling he doesn't think anything of it (that is, you might think it is more involved than he does).

Good luck.

well they went to college together, but i only met this guy once and that's it. and we sometimes just chat online talk out middle school and our neighborhood and the people we knew.

Why haven't you said no thanks? Looks like you're heading towards a messy situation... Unless you like drama, of course.