What the hell is wrong with my head? Or is it my confidence?

There is this girl i really like in my high school. Its the kind of "like" where both personality and looks (at least in my opinion) are perfect for me. She isn't part of the "popular crowd", like me, and she is kinda shy. The way i feel about her though is amazing. Since i started to like her, every other girl i see is dimmed down. She appreciates me greatly as a friend and I don't know if she likes me the way i do or not ( sometimes it seems she does sometimes it doesn't) .. ex) In my birthday card " I can't believe a person like me met a person like you". Things like this made me hopeful but since then i have entered a mental block. Almost nightly, i have dreams about a guy who i know is ME, but who has the looks, muscles, attributes, and "bad boy" persona. He talks to me in my voice and tells me that there is no way she will ever like you. The way he talks is in a way uncomfortably true. One example, " Look , you are a nice guy, girls don't like that.. They would rather have someone like me." He says lots of stuff like this and in one particular dream, i saw the girl i like get together with this guy and have a relationship that I only hope for. He makes me feel unwanted as his "bad boy" persona apparently kills my "nice guy" persona. his personality is s*** but i only see how successful he is with girls in my dream. Nightly, he tells me to change, and i tried but changing clothing, cleaning up, Working out and getting a six pack and by trying to be more of a "bad ***". I know people around me are confused about the new me, but these dreams of mine convince me (through strong imagery of him being with her) that she, or rather any girl, would prefer him over me. One of my best friends heard about this and thought i was insane. He is also a friend of the girl i like and says that she is not that superficial. But i can't help continually think that If I had all those things she would fall in love with me the same way.