"She is a very sexual person. I can not exagerate this enough. When she wants it, she gets it. Simple as that. But I do believe that she is capable of monogamy (which is a must for me)"

Does she have a past history that makes you so sure of this? What's the longest she has ever been monogamous?

"In the end it is really up to her. I told her what I wanted in a relationship and that if she wanted more I would understand if she wanted to break it off and date another guy. This has always been the case."

I guess that what I and others have been trying to tell you, is that women are stupid in this regard. You may be SAYING that, but your ACTIONS give her reason to hope that you will change - become the spouse/husband/father she is looking for. THAT'S why we say it is unfair to her for you to keep dating her. You KNOW you don't want what she wants, but you think so long as you put it out there, it's okay for you to keep enjoying the sex. But it's really not fair because she's still hoping for something different.

" It was either this or she goes back to having car sex with bar pickups on weekends while her Son stays with her Niece. How would that help him?"

If the niece would watch him while she was hooking up with married men (speaking of which - why married men? I'm sure there were plenty of single guys available for hookups. This does nOT speak well of her.) why couldn't she watch the son while mom went out on a respectable date or two? I don't see how you breaking it off condemns her to meaningless sex with married men.

You are rescuing - generally a mistake - and rationalizing - also a mistake.