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So my question is did I fuck up somewhere and she's put me in the LJBF category or is she talking some bull shit code that is really an IOI when she says "Im lonely, I need A friend".
From what you describe it could be either and she may not know.
So, depending on how much patience you have, you play it a couple of different ways.
1) Control the frame as if it were definitely an IOI--instead of saying "no we can't be just friends," as some have suggested, just push it forward in your own preferred frame: invite her to your place for some quality time, and escalate the kino.
2) If you are willing to move it along slowly--i.e. this is someone you want for a GF etc.--then use rapport building techniques, especially at the emotional level. (But be prepared to have some frustrated nights.)
--Note, I've had it happen more than once that what I thought at the time were LJBF signals, were really "I don't want you to think I'm a slut" signals, and the girl jumped me as soon as we were in private.