They 'decided' to stay just friends? This means they actually discussed it. So yes, there is something going on between them or his answer would have been different. More along the lines of 'don't worry, we are just old friends nothing more'. At this point, don't even think of challenging him on it though. You haven't been seeing this guy long enough and you won't be able to compete with her, friend or otherwise. He probably gets advice about his GFs from her at this point.
The only way to win this battle is to be patient. If he realizes he cares about you over time he will naturally draw back from this other woman. But be careful. Some guys get hung up on 'unavailable' women this way for a long time. It might be more effort than you are willing to expend. If you find out he is sleeping with her, tho, you should cut and run.
Second thoughts can generally be amended with judicious action; injudicious actions can seldom be recovered with second thoughts.
--Cyteen by C.J.Cherryh