Kelly most have known about Joe's feelings (at the latest: the flowers). I doubt she was just clinging to him for attention, so I guess she wanted to genuinely be his friend. She didn't, however, tiptoe around his feelings and - even when falling for someone - a real friend wouldn't just go ahead and start dating his best friend when she knew what was up.
Patrick would have definitely known about Joe's feelings for Kelly and wasn't shown to have much interest in Kelly earlier. Only when she started to get interested in him did he take his chance - simply ignoring his best friend's feelings. If he hadn't known or they were openly competing for the same girl, it could have easily been forgiven. But the way it is, the betrayal will stay with Joe, especially when he hangs out with Kelly and Patrick as couple. Depending on how long that relationship lasts, I think Patrick and Joe will drift apart - even though they have forgiven each other. If Kelly were out of the picture soon after, I think they would become the close friends again they used to be.
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