You may want to consider reading Dr. Dobson's book Love Must be Tough. Great advice for situations like this, along the lines of the DR/DB books.
On the bright side, at least she still has a conscious that is letting her know what she is doing is wrong. It must be tormenting for her, but does not mean you need to be her doormat to make it ok for her either. You may want to consider changing your approach on exposing her A however. I don't think it helps to tell her you are going to purposely expose her if she leaves (this feeds her chaos engine, and notice that generates grief for you). Threatening her is like rattling the cage of a wild animal. Maybe tell her something along the lines of what she is doing is not ok and set some reasonable boundaries. For example this guy is not welcome in our home (The Dobson book has some good examples). Avoiding emotional entanglements with her is a good thing for you now, and implementing this is one of those boundaries that helps you keep your sanity in tact. You can't control her. No one can. Don't waste your time and energy trying. Hopefully the process will work itself out and she will see her mistake.
You sound like a good man. I'm sorry you find yourself in this boat (with the rest of us). Glad we are rowing together however. :-)
FunDad
Me:40 W:39 M:Dec 95 Split: Jul 14 W Filed: 9/16/14 Several Children (including adopted)