I don't think it's explicitely stated that Michi's mom is dead, but her dad does talk to the mom's photo about how Michi is doing, which seems to emply that the mother has died.
He also mentions that "if Aizawa's death did not change how Michi feels about her, Michi's just like her dad" which...
So, I see two options for Izumi:
1) She genuinely thinks her feelings for Fujishiro are just friendship and applies that logic to Fujishiro's feelings for Kurokawa (cope route)
2) She knows and tries to stop Fujishiro from realizing (either because she's jealous or because she doesn't want her...
The symbolism for Bibi burying snowball blows my mind!
Like... she finally found someone to love over her deceased pet and it really shows her character developement!