You ask 'Will they ever be friends?' as if it is an equal relationship.
It is not. He is an adult who is bullying and picking on her, making her life in her own home uncomfortable and miserable. She doesn't have the option of 'getting on' with him! He is in the driving seat and he has treated her badly, instead of fostering love and security in a little girl who was only FIVE when she met him. He has made the situation such that she dislikes him and probably FEARS him. How can you ask if they'll ever be friends? Can't you see the wrongness of that statement? Can't you see how you are trying subconsciously to lift the blame from him for this situation?
Because she is a child, she won't even have the perspective which would give her the comfort of knowing that things won't always be like this. Imagine how she must feel.
This is the man he is, if he has treated her like this for so long. It is almost inconceviable that he would really be able to change, and anyway - the damage is done. Your daughter must dislike him vehemently at some level. Would you like to share your home with an unrelated man who you disliked and who treated you horribly?
You are right to worry that she will feel let down by you as an adult, though it says a lot that this is your 'biggest' fear - what, your biggest fear is about YOU, not HER? You would be better worrying about how her life must be now, and what kind of person she will grow into as a result of this treatment. You can't undo it later.
I don't understand why you haven't left, because I honestly cannot imagine having anything other than hatred towards a person who treated my child badly, for no other reason than that they could. Horrible. He sounds like a nasty piece of work. I'll repeat - she was FIVE when he came into her life. A good man would by now have been her beloved Daddy.
Get help if you need it to get rid of him, for both your sakes. It sounds like you can't imagine doing this, or you wouldn't have asked the question you did. That's not right. Your daughter should be coming first, no questions. Why isn't she? What are you afraid of - being alone? Finances? Are you mistakenly thinking that even a bad Daddy figure is better than none? Think about this and do something NOW before you lose your daughter as a teen.