He's trying to entice you to have sex with him in a pretty fucked up way. I would not let him sleep over or sleep at his house anymore as he may continue to do things like this.

Sleeping in the same bed doesn't require him to sleep in a position that makes his erection press against you. His body reacts that way because he wants sex, period. He's trying to play innocent with that "my body reacts to pretty girls in my bed" line. I have shared a bed with a few of my female friends over the years and I did not get an erection because they're my friends and I wasn't hoping to get laid.

Now for the worst part... Him walking around in front of you nude with an erection and saying "he's very comfortable around you" is fucked up because he didn't take your comfort into consideration. Why? Because he didn't care, his goal was to entice you, and when you weren't going for it he mentioned blue balls in the hopes that you'd take pity and offer to help him. He could have easily masturbated in the shower, but he instead chose to seduce you in an extreme way then play it off like it's no big deal.

You need to have a long talk about boundaries with him or just straight end the friendship.