I'm going to remain friendly with my racist coworker
Why would you remain friendly to them?
He reminds me of my dad..
It's best to stand up against those who are racist. You should let them know that their behavior is wrong and it should not be tolerated in the workplace.
I can't. He wont like me if I do that. I don't want to lose him.
I can understand how much this coworker means to you. You should try and stand up against racial injustices when you see them. He may not be aware what he is doing, so mentioning it politely might help him be more considerate.