There is NOTHING to be confused about. He meant it sexually, period. There would have been no doubt in my mind, and I would have answered with a firm, 'No, there is nothing I'd like to do before getting married.' If he asked again, I would have said, 'I am absolutely sure about this, and there is certainly not anything that I'd like to do that I wouldn't want my FH to know about. Please do not ask me again.' If he continued to bother me after that, I would tell my FH that this guy is not a friend and needs a good ass-kicking.
But since you didn't handle it that way, you guys need to decide how to proceed. My number one piece of advice is to STOP DISCUSSING IT WITH HIM! You have two choices:
1) Accept that it was sexual and end the friendship.
2) Believe whatever you want and continue the friendship.
If you choose to continue the friendship, it DOESN'T MATTER whether he meant it sexually or not, so why sit here agonizing over it? I think it's pretty obvious that he did mean it sexually and is now trying to cover his ass, but why does it matter? Either way, you get the same result now that you've made your answer clear. Since the topic is closed, why does his intent matter? Either end the friendship over this or forget it and move on. Nothing good will come of discussing his feelings and getting him to admit that he meant it sexually, so let it go. As long as he doesn't act on his feelings in the future, does it really matter that he had them?
Vice President and Guardian of the Toilet Brush of POOP: People Offended by Offended People