First of all, you need to know that your W is living in a complete fantasy. I would not be surprised if this was how she mentally escaped her terrible ordeal in her childhood. A person who can't physically remove themselves can escape into their own dreamworlds.
Not only is your M in crisis, but you and your W, individually, have been in emotional crisis for a long time. She finds this man over the Internet and he says all the right words that make her feel young, beautiful, and desirable. Coming from a man who is not her H, and who has no obligation to tell her these things......is quite the sexual turn on. It also gives her an energy to get through the day, and it gives her something to look forward to......which is her next contact from OM, b/c she knows how good he makes her feel. Naturally, her fantasy talent shifts into overdrive and she's lost in this entire realm of what she wants to see in him and how wonderful her life will be once she is free from you.
She wants to escape from her reality, and you certainly are a huge factor. She will separate issues into two main categories, that being all negative feelings & problems go in the LBH box, and all hope for the future and other positive things go in the OM box.
She can't identify OM with her past hurts, the burdens of M life, or any negative realities. Therefore, all her negative thoughts and feelings are directed toward the H. He gets the worse side of her. She saves her best side for OM.
She convinces herself that she must be in love with the OM b/c of how she feels whenever he gives her special attention. For a WW, it is all about her feelings. She will operate from those feelings, separating into the two categories. Bad stuff = H; Good stuff = OM.
No amount of MC is going to help her as long as she resides in the fantasy. You are wasting money paying to get help for her or the M, at this point. Her mindset has changed.
At the moment, you need to provide more reality for her. She needs to experience being responsible for bills. You need to stop assisting her financially or doing her laundry, cooking for her, taking care of her car, and other acts of service. That's not to say you stop doing things for the kids, but don't do EVERYTHING as a way of easing her burden. Know what I mean?
More reality needs to burst the fantasy bubble for both your W and her OM. This can happen without you ever confronting him. As she gets more frustrated with reality and sees she cannot turn to you for support, she will begin to add pressure to OM. He may play along for a while, but at some point I think he will begin to backpedal. A woman with three kids? Hey, he can easily find another vulnerable on line.....so off he goes.
I would advise against separation counseling. If you need to separate, just do it. I think the counseling may not be in your favor.
It is not about what you feel should work in your M. It is about doing the work that gets the right results. Do what works!