Thanks Green Blue - and to others, YES she did indeed tell me almost 3 weeks ago that she is in an EA but that it WILL turn physical. She was not grey about this. She very specifically said she couldn't spend 15 months seeing this person every day and not act on it and that she was not going to drop out of school.
I have suspected that it already was physical when she told me but she was too ashamed and prideful so this was her way of being able to say we were 'separated' before anything actually happened.
So that is truly my dillema. OM is real. I have been promised that she will be a cheat sooner or later and now i am asked to sell the house so she can quit her job and just focus on school and see the kids a bit more (because now she doesn't at all). She expects me to pay 100% of all bills while she in school. But -- obviously this just gives her more time to see OM. So I can't see how she would ever respect me if I actually went through with selling our house, taking a $200K loss and then funding a rental - all the while she is having an affair.