It just sounds like she is taking advantage of you and manipulating you by not telling you where she was living and also by moving in with the OM. These are things that directly effect the well being of your children, nothing to do with the M or your R with her. This is not fair behavior. Not only should you have had all of this info upfront, you should have been invited over to check both places out before she moved!
Don't let the new & improved GD pay for past mistakes, thats all. Look out for you & the kids first. W is an adult, can and should be made to fend for herself...do not make it easy for her move on with your $$$ and this new guy. I am not saying not to be fair to her but you can always give what you feel is appropriate down the road if its above & beyond what she is entitled to.
Me: 30 EX-H: 37 DD: 5 Separated 6/07. MC for months, EX-H quit MC. Divorce Final 8/14/08. Trying to move on with new life.