You sound so much like me, it's scary. Typical "nice guy," fixer/pleaser, trying to make everything OK if I just say and do the right things.
That's co-dependency, not love (two books I'd recommend, AFTER you read Michele's DB or DR, would be "Co-Dependent No More" ).
As "alien" as your wife has seemed to you, if you will spend some time studying affairs (and I strongly suggest that you do), you will find that nearly EVERYTHING she has done is pure "SCRIPT." The ILYBINILWN speech. The re-writing (and ever-changing) of marital history. The "I don't want to be with anyone right now" thing. The back-dating of when the affair really started (to a date before they tell their spouse, that way it's not really "cheating," you know ).
Sadly, the only thing I think you can do is to let her feel what it's like to live without you (which you're doing), and to modify what you told her about letting her go to take away the open-ended nature of it (should have said "If at that point I still have feelings for you, we can see ... ").
I do think you need to see a family law attorney -- IMMEDIATELY. It doesn't mean you have to DO anything, but you do need to know what your rights and responsibilities are, and protect yourself).
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