You need to follow up the broken relationship with a solid character arc where the MC can learn from his prejudice and overcome it. You've given the story time to create a basis for a relationship with the two leads, take the time to slowly undermine it, so you need to think about what the MC needs to go through to be more tolerant, and as he becomes more tolerant, it might become possible for more intimate feelings to surface.
And people do overcome prejudices they grew up with. It's not an impossible thing, but it is something that's hard and requires time and personal growth. Often times, as you stated, spending time with someone you had misconceptions about is exactly how someone begins to overcome prejudice. But from your story it ends up taking a dark turn and is undermined. So I'd recommend maybe the next arc of the story involve MC ending up in a situation where he's with someone else of this other race (or maybe a few?). Let him learn through his experiences with them that he was misinterpreting his friend's behavior.
I think you need to resolve the racial tension first, since it's the reason for their misunderstanding and the break in trust, unless you're able to come up with a good way to address the homophobia at the same time. But I think it'd be easier to resolve the racial tension, which would result in MC having a better understanding of their friend, and leave room for something more intimate to blossom. Possibly have him find the friend again to reconcile for the fight, and then the additional time spend together helps grow that level of intimacy they couldn't have before.
Of course you also have to address the break in trust of the friend, since they'd gone through something traumatic by being reduced to a monster (not to mention the subsequent slurs and fight).
ANYWAY these are just my rambling thoughts based on what you said. If you're good at tapping into emotional depth, it can be a really good story, but its a super difficult topic to tackle.Hope something of what I said is helpful. XD