This is really weird....your whole situation. Take or leave these observations/opinions/advice, but to me, knowing only what you post, it seems you are a bit of a pushover. What do you say when your wife talks about getting back together when OM dies? That's really icky. Personally, I'd probably say, "not likely". Correct me if I'm wrong, but this sounds like she's basically with him for his money. She probably is hoping she'll get an inheritance from him. That doesn't sound that desirable/attractive.
Does she just come right in to the house? Do you get to swing by and walk in her house/OM house whenever you want? Your separated...you have your place and she has hers...she doesn't have two places. Personally, I would have covered up. While OM is in the picture, what you have is yours. Let her use her imagination.
Maybe this seems harsh, but it sounds like you are her for sure backup plan. Are you? Do you have some say on whether you want her? I'm not saying don't be friends for the kids' sake, but as long as she's living at OM's house, it just seems a little bit wimpy to not set more boundaries and at least make some statements that let her know that a relationship with you in the future isn't a given. If you've done this already...maybe you could stand to reinforce this a bit.
In the end, it's not the years in your life that count. It's the life in your years. Abraham Lincoln
It is hard to fail, but it is worse never to have tried to succeed. Theodore Roosevelt
