Actually, Nav, you did damned good. I'm proud to know ya.
Especially "I can't be friends with you" part. I know that wasn't easy, but it was necessary. I had to tell my wife the same thing. That if she chose to end our marriage this way -- by cutting and running, having an affair, and then lying to everyone about it -- that I had absolutely no intention of being her friend, much less her BEST friend, because friends don't treat each other that way. However, if she chose to end her affair, and end all contact, and come back and work on the marriage (incl. MCing) for some period of time, say one year ... and if that doesn't work out then ... then yeah, we could probably be friends.
That -- she told me when we reconciled -- was what shook her up more than anything. She told me she missed our friendship, and what I had said to her made a big difference.
This probably won't make you feel any better right now, but you DO realize that at least you have some CLARITY here now. I mean, if this WERE "just a friendship," do you REALLY think she'd be ending her marriage, and giving up 50% of her time with her kids over it??