Yeah, the MCing wasn't going to work as long as she was still carrying on her affair. I'm sorry you had to get that news -- I know what a punch in the gut it is.
You two will have a LOT of work to do, but it definitely IS possible. Not to go back to the OLD marriage (because it sounds like it wasn't healthy for EITHER ONE of you), but to totally build a NEW marriage, from scratch. It can be done, and HAS been done, by tens of thousands of couples. You'll need a good, pro-marriage MC, tho, preferably one who specializes in infidelity issues, and you'll need BOTH of you to work at it, and absolutely 100% NO CONTACT between your wife and her OM.
I have said that there are different stages of "sorry." Right now, your wife sounds like she's still in the "sorry I got caught/sorry my affair is over" stage, and not yet in the TRULY sorry for the hurt she has caused her FAMILY stage.
Would she consider going to a Retrouvaille weekend with you?