Are you familiar with the concept of avoider/pursuer? If not, you need to understand how that dynamic works and why. It is a FOO issue and it comes from some form of childhood abandonment/abuse. By that I do not necessarily mean your spouse was literally abandoned or beat, but that she did not get her needs met in the way that she needed at that time. It might be that she got more attention than any of her siblings, but if something was missing that left and emptiness in her, then she would have started to create defenses to protect against that.
You two are both the pursuer, like I. My wife is the avoider. She was overwhelmed and engulfed with abandonment issues as a child and the only way she could relieve the stress was to pull away. It is a fear reaction. I am the pursuer because I had to walk on eggshells with my parent’s fighting. I fear losing a relationship so I pursue. We make for the perfect match, as far as our issues are concerned. Both of us have come a long way in recognizing and breaking this cycle. I no longer pursue as I did, though I still get angry at times. She has learned to not avoid and to talk about things, even though she may need a cooling off period first, and even if she does not feel like talking.
So you can see that you both probably have abandonment issues that cause you both to pursue, and that feels like engulfment to your wife, so she pulls further back, you pursue harder, and the cycle gets more intense. You contribute 50% to this dynamic.
What your wife really wants, like mine does, is to be held and comforted. But if like my wife, she did not have that modeled for her and does not know how to accept such intimacy. It is too scary. She is stuck in limbo, and while not happy, she is at least safe. Your counselor is asking the right question as to whether she is through with the relationship. That will cause her to have to face what it is that she wants, rather than what she does not want. But beware that if her fears issues are intense enough, it will seem safer to her to end the marriage rather than face her fears.
The key IMO is to give her loads of empathy and focus directly on her core fears (which means you need to identify what those fears are). She will avoid, deny, deflect, get angry, do anything and everything she can to avoid the topic and turn the focus and the blame back on you. So to disarm this, you deal with your issues openly, in depth, and in front of her. By you going first, she will see your vulnerability, develop some compassion for your fears, and take away any excuses not to work on herself.
This book by Steven Stosny, “You Don’t Have to Take it Anymore” uses this compassion approach as its core theory. It think he has the right isea on how to deal with marriages. For more severe cases and to further increase your understanding, read “Emotionally Focused Couple Therapy with Trauma Survivors: Strengthening Attachment Bonds” by Susan M. Johnson.
“Facing Love Addiction : Giving Yourself the Power to Change the Way You Love” by Pia Mellody and Andrea Wells Miller as well as “Addiction to Love: Overcoming Obsession and Dependency in Relationships” by Susan Peabody will help you see the catch 22 cycle you are stuck in. I think these later two books are good for your wife to read as well.
To finally slay the demons, you will need to face some of your FOO issues, and “The Narcissistic Family : Diagnosis and Treatment” by Stephanie Donaldson-Pressman, Robert M. Pressman do a good just of explaining where all this comes from, why it is so destructive and what different type of abuse and abandonment actually look like. They are not necessarily what you think.