I've posted often that I think it's an EXTREMELY unhealthy dynamic when one spouse is cheating, the other spouse KNOWS that they're cheating, and the cheating spouse KNOWS that they know that they're cheating . . . and says/does nothing.
Your sitch is a bit of a gray area, I'll admit Alk. In that we all agree here that your wife is almost certainly in at least an inappropriate EA (if not more), you definitely know, and we THINK she probably knows that you know. Gray area.