Well, since this is a platonic girl friend (I take it) then it's a different thing than if it's a romantic girlfriend. If it's platonic, then she's looking at you, as her friend, to re-assure her. If there's something spectacular about the girl being looked at, then it's probably not a problem to say something like "Heck, who isn't she more beautiful than?" (note how you are including yourself as one of the lesser mortals.). If the girl being looked at is less than spectacular, then I guess I would point out something about the girl that was different and good...but point out that this one thing doesn't make her better looking. Something like: "Well, her hair is just great, but great hair doesn't make a girl beautiful."
I'd also want to know why my friend was suffering from this insecurity and see if we could do something to fix it. Is she feeling frumpy because she doesn't have any new clothes? Could a trip to a thrift store and some creativity revive her wardrobe? Would a new hairstyle perk her up?
If it's a romantic girlfriend, then there's really only one answer: "She is beautiful, but she's not more beautiful than you." It's pointless to try to convince a romantic girlfriend that you haven't noticed when a beautiful girl walks into the room. So, don't try. Heck, let her know that you always appreciate the sight of a beautiful woman...then turn to look right at her and say "Which is why I'm so happy being here, with you."
Thanks to Ron Salon for the signature banner!