At the time my grown D was with us, she was recovering from surgery. It was kind of stressful for all of us during that time. We live in a very small house and during the time she was here, her grown son also came back to live with us. Long story. Anyway, what I didn't know for a long time was that she has found information that pretty much told her everything that was going on, so I was glad that I had not told her a bunch of lies. I did have an EA, but I did not lie to my H nor to my children. I did tell her that her dad and I were having problems and that he found some IM that I had been sending a man.
The more cover up or lies that goes on, the worse it will be in the end when it all comes out. As bad as I was humiliated by the knowledge my D had read my personal messages, I was glad that at least I had not lied about anything. Of course, I am glad, also, that she did not come out and ask me about OM before then or I don't know what I would have done......I probably would have told her, b/c I told my GS that my H found IM text on the computer to OM I wrote. But, she did not ask, she just told me she knew.
If I were you and my D asked about her mom, I would be honest and tell her that there are problems, but that her mom should be the one to tell her what she is doing. If she insists on you telling her, just calmly say that you had really rather her mom tell her b/c it is her mother's choices that has caused the problems. Then the W can't get mad at you or accuse you of turning the kids against her, etc. However, if the W should lie about it.....then I would spill my guts! The kids have a right to know what is happening if there is going to be a divorce. Be a gentleman by giving your wife a chance to talk to the daughter, but if she doesn't come clean.....then tell it. You owe your kids the truth, if the mom doesn't give it. But, don't cover up her behind any longer. She doesn't deserve to have you cover for her and it will only make a liar out of you and lose your D's repect.
It is not about what you feel should work in your M. It is about doing the work that gets the right results. Do what works!