Look at the dream as being a reflection of your own inner processes, rather than relating directly to individuals separate from you. So, this person represents an aspect of yourself. The repetition of the images, the scenes you describe, suggest that although you were never intimate, you were indeed touched by intimacy through talking and spending time with her.
It seems likely that you lack some company in your world. This person represents times when you were able to talk openly, speak your mind and have some trust in the response. She talks with other people, she seems to be sociable and she has fun, while you look on. This is your own ‘inner female’ persona, showing you things that perhaps you find hard in your everyday life.
I have kept dream diaries and analysed dreams for 20 years or so, it can be hugely helpful to be really honest with yourself about your own dream content.
My suggestion would be, (rather than approach this person or try to revive the relationship) to look at your own friends, your social circle, activities and see whether there is something you would like to improve.
A very useful technique is to simply ask for clarity from your own dreaming mind, before you sleep. Spend a few moments, as you go to bed, thinking on these dream images. Be honest. Allow yourself to really look at what is going on, it is entirely private and entirely yours. Then think to yourself, or say out loud ‘I want to know more about what this means, please tell me’. You could also ask for your friend (in your dreams!) to say something to you that would help.
Give it time and do it more than once if you need to. I’m pretty sure you will find out for yourself what it is about and you will feel better and gain confidence.
Good luck, and happy dreaming.