Been a couple weeks and some significant changes, so time for an update.
With regards to what bug was saying about seeing XW without expectation....difficult. I realized that while I was saying I could do it, I still held the expectation that she would respect my wishes and not pursue me while she was in contact with OM. That turned out to be false....they are still talking daily.
So when I back away a bit, the pattern seems pretty clear. I don't believe W was really ready to reconcile. I'm not even sure she wants to honestly. Rather, I think she was trying to get it back to the way it was, or at least, as close to that as possible. She has become addicted to cake!
And for me, I realize that the continued contact, the friendliness, the sex, it was all preventing me from moving forward. I became mired on the sideline...not able to let her go, and not able to live my life. I sit and hope that she changes, but in reality, I enable her to have a similar existence by doing what she'd gotten so good at doing...hiding the truth, lying, and manipulating.
So with that, I think I am really ready to let go. In the back of my mind I still have some hope that she'll figure things out, but I'm no longer convinced that will bring us back together. And while I miss her, I don't miss the stress and hardship she brings into the relationship. It's simply unhealthy. For the last few weeks I've been dark (except for kids/finances), and I'm a lot more comfortable.
My lady friend and I have kept our distance, but I did start seeing someone else this week (I'll steal Ruby's acronym here and call her SE2). She is very balanced and we click on a lot of levels. She knows I'm not ready for anything serious, and wants us to build a friendship first, so we're in sync on that as well. She seems like a pretty awesome lady, so we'll take it slow and see where it goes.