hello hawk, i am so so sorry this is happening, i can understand how painful this is for you. i agree with cs and rock...by not doing anything, you are enabling this situation..if she is enjoying it and has nothing to lose, why should she stop?
i am not suggesting you attack her, but find out why she is doing this... why she feels the need to look outside your marriage if you want to save your marriage, let her know that..but you also need to set some boundaries...
she is a married woman, she cannot have both (unless of course that is acceptable to you).....