"As long as he doesn't act on his feelings in the future, does it really matter that he had them?"
He DID act on his feelings. He made the suggestion that they "do something" that FH would never need to know about. That's acting, not just thinking.
If the guy had Private Thoughts about a sexual relationship with a female friend, engaged or married to another friend, that's fine. Private Thoughts are private.
It's when they escape the privacy of one's own mind that they cause problems. By saying anything to the OP, the Private Thoughts ceased to be private.
If it were a crime to have Private Thoughts about men not my husband, I'd be in hot water. However, the chances of me ever being in a position to act on those thoughts and suggest a roll in the hay during a private conversation with George Clooney are, sadly, virtually zero.
I do agree with everyone else. It was sexual. I also agree with everyone that you need to end the friendship. You also need to tell your FI about it. If he was such a good friend he would haven't said that your FI doesn't have to know.
I'll tell you something that happened to me a few weeks ago. It's not a similar thing. But I was taking a nap one Thursday afternoon. The phong rang. A guy starting asking me out. He was saying just going out to eat. (I thought for a moment thinking it was an innocent thing. Then I was thinking 'What I am thinking I'm engaged.') I asked the guy who was. He said Brian.He said he would pick me up. I told no. (I wouldn't feel out going out anyway because I was having my period that weekend.) (I kept trying to figure out who he is. I know two Brians. One is eight years old. The other is an ex-boyfriend's brother who I haven't seen or talked to in years.) He even asked if I wanted to the next weekend. I told no because Chris was supposed to come down. He said that he had married once. He said that Chris will eventually cheat on me. I told him no Chris wouldn't. I did tell him that we could talk if he wanted to. He said no. (That is when I knew this was about sex.)
He asked me to have phone sex with him. I told him no. I finally told him I had to go. He hung up on me. I still don't know who the guy was. I did tell my Chris about it. He told me if the guy calls again to call the police. I even asked my mother if she knew any Brians because she had tried to set me up once. She said no. The guy hasn't called again. Waiting to be Mrs. Styskal