Kelly, why are you even responding to this guy's emails anymore? I know why you did at first (because he's your boyfriend's friend, and you're a friendly girl), but he's crossed the line. No more talkity-talk for him.
I say don't email him anymore, and if/when he brings it up in person, just kinda smile and say you don't get the chance to check your email anymore, or you don't really use that account these days, or something else innocuous.
I also say that Neil knows what's going on, so let him handle things the way he wants to (i.e., either talk to Steve or don't.) Not really your business -- your job was to tell Neil what was going on, and you did that, AND to stop Steve from continuing to be disrespectful (which you aren't doing.) Sounds to me like Steve figures as long as you're talking to him, he has a chance.
ew ew ew. What a mess. I do not envy you this.