Just catching up on your sitch, MH. Sorry you find yourself here. Looks like you've been getting some good advice, though.
A couple of things jumped out at me. First, whether to tell the kids. Is it possible for you to talk to a child psychologist who deals with this kind of stuff? Even better if your W can go with you - that way you will both have good information of what to say and what not to say. (And oh dear lord, do NOT tell your kids you are sorry for screwing up the M. Nooooooooo!! You tell them that sometimes married people need some time apart from each other, and the details are for the grownups to worry about - and then reassure them that both parents still love them to the ends of the earth.)
I'll tell you what the psychologist I spoke with said. He said that both parents need to be there; you don't give them any more information about the M than necessary (for your kids' ages, not much detail is necessary); you make sure they know you both still love them and that this is NOT their fault. And you give them a chance to ask any questions they have. Kids want to know the practicals - how is this going to affect me?? So don't tell them anything unless you have the answer to that question. Since she isn't moving out and nothing is filed, I don't know what you would say. "Just to put you on notice, we might be getting divorced at some point, but we're not sure when, Mom needs more money, and then she might move out or Dad might move out, and we don't know where we will be living or how often you will be with each of us . . . " I don't see how telling the kids does THEM any good right now. I think your W wants to tell them because she wants to quit faking in front of them. But, IMO, that's just her putting HER burden on THEM. Again, you should speak with a psychologist - I'm just tossing out my own opinion here.
Second. I would not resist any R talk. You don't bring it up, but If she brings it up, it's your chance to listen (I mean REALLY LISTEN) and understand and validate her feelings. If you just tell her, "I don't want to get D," and that's all you say, and you don't respond to her desire to talk about the R, what effect do you think that is going to have?
About D talk. What is it that she is asking you? Is she asking you to help her plan it? I agree with LITB (I think was who said this) that you just say you don't want a D but you won't stand in her way. Don't ignore her and pretend it isn't happening, but don't agree with her or help her in any way.
If you want to, you can just ask your W straight out how she feels about physical affection from you. If she says she doesn't want any, then you just don't even try it. I think that's easier on the soul than trying and being rejected.
Like everyone says, don't expect any kind of turnaround anytime soon. Are you GALing??
me: 44 XH: 42 M 11 years D10 and S8 Bomb drop 9/27/13 D final 7/1/14