Your W has basically told you she is still in love with her high school sweetheart and she won't break contact off with him?! You are right in expecting her to end her relationship with this other person. She is having an EA even if it hasn't turned PA yet which it most likely will if she continues contact with him.
Have you thought about kicking her out of the house? Exposing the A to family/friends?
Your W sounds like she is rewriting the history of your M so that she doesn't have to feel as guilty about what she is doing. Don't believe a word she says. You sound like a very caring person with solid morals and values. Don't let her take that away from you.
You have come to the right place and will get lots of good advice. I am still pretty new around here, but hang in there. You will get the support you need from others who have been in your shoes.
If you haven't read Divorce Remedy definitely do it asasp!
M-34, H-37, No Kids Married 4yr, Together 6yr Discovered EA 7/24/10 Separated 8/6/10 Filed 8/16/10 H Moved home and Piecing 9/20/10 H returns to OW 12/10 EA was really PA I file 12/29/10 I move out 12/30/10