Uh, to clarify: they aren't actually brothers. Their parents are friends and the kids went to school and were friends before he started living with him. It seems the other parents didn't even adopt him either. So, this is not much different than falling in love with your next door neighbor best friend who practically lives in the same house.
Of course, the guy should respect his friend's wishes to not get together and should be berated if he keeps persisting after being turned down or if he refuses to consider his friend's situation/feelings. But he actually hadn't done anything wrong here right now either.