I'm sorry, Orich. She's lying that it's over, and it's precisely her attraction to him that makes her so unwilling to even TRY to work at your marriage.
Whatever you do, DON'T move out, and DON'T relax your boundaries. In fact, they're about to be more important than ever. If she doesn't like them, why then SHE can leave.
God, I detest affairs. I really, REALLY detest affairs!!!