First of all, know that if you were to break up with her, life goes on and you are still very young and would find someone else. Trust me.
Second of all, the feelings you feel for her are natural. It is easy to be jealous when she even thinks about another guy. If you are truly worried about it, I'd sit her down and have a serious conversation with her about him, and get the truth. If you want my opinion, I'd say she is telling the truth. If she did like him and everything, she would probably keep it a secret. I've seen this situation before, and in most cases, the girl sees the guy as a friend and the guy wants something more. This is a pure guess, however. James and her may truly just be friends. But I'd first and foremost just have a serious talk to her about it, in person.
And also, jealousy is a bad bad thing to have. If you truly love her then you musn't be so jealous. I know it can be really hard, but it is something you must overcome.
I may not be the greatest advice giver, but I do want to help. My e-mail is
jesoneric@hotmail.com if you ever want to talk to me about it.