Lily repeats this phrase over and over and over and over and over and over again to the point of insane frustration.

Every time I crouch to sneak around this is all I hear from lily. which is really counter-productive since shes supposed to be the most stealthy one and by the sound of what she says she is supposed to know how to shut up.

It has to be a bug with her since she only says it when i am crouching to sneak and then does it incessantly. no other companion i have come across points out the fact that i'm sneaking (i.e. using their "sneak phrase") every 10 seconds.

I'm surprised you haven't killed her yet. I have a hard time not killing the things that annoy me in the game (avoid little lamplight in F3 all together, never thought I was going to finish the Wasteland Survival Guide thing, just that lady's voice much less how dumb she is... must have killed her 1000x over)