I hope you'll take this the right way. I think a friendship is all you will have with her, unless there is a physiological breakthrough.........or her heart changes. It's not the friendship that has problems. She may or may not ever feel sexually attracted to you again. But that's not to say you are not a sexually attractive man. If she is holding onto old resentments.......that could interfere with her desire. If she has an unrealistic idea of what marriage really is in the true world......then she'll think there should never be any issues, and that if she was really in love she wouldn't haven't to work at having a great relationship, and she would have all the wonderful feelings to match. Although this sounds emotionally immature, a lot of young women have these notions in their head.
I went for a long time not feeling desire for my H. I had an awful lot of resentment toward him, and I began feeling disrespect for him as a man and as my H. I don't know if those type of feelings affect a man's desire. Short term, I doubt they do, b/c I believe men and women are made differently in more ways than just physically. Feelings of resentment and disrespect toward her H, can kill the attraction and lower her desire to make love with him. Of course, a woman is affected by her level of hormones her entire life.......so, there's always a chance she needs a little help in that area.
Anyway, a W can't feel desire for the H she disrespects. Every time I tried to approach my H about my needs and the issues in our MR, his answer was to have more sex. It really turned me off, even more. I didn't care if we went for the rest of our lives not having sex! Actually, it was more complicated, b/c I started losing myself in romance novels.......b/c I had such an emotional desire that was not being met by my H that I started fantasizing about characters in a love story, an actor in a movie.....whatever to fill that empty void. When I allowed my fantasy to grow......I got colder toward my H.
I'm not saying your W has done the same thing. It just seems strange that it suddenly changed following the birth of the first child.......if things had been as great as you seem to think they were. Whatever her real issues are, I sincerely hope she gets help.
BTW, referring back to how she would get so cutesy with you in front of others.........that may have been b/c she wanted to present what she thought was the idea picture of the perfect, loving couple. My H once accused me of trying to turn him on when I knew he couldn't act on it. In other words, it would be when we were in public or visiting in our parent's home, etc. I felt really insulted by his words. I had no desire to turn him on, b/c I didn't want sex with him......but I felt I could be more cutesy in front of others, without him pressuring me for sex.
Anyway, I have seen it played out thousands of times, right here on this board. The minute one spouse is through with the other one......the LBS has an intense desire for the spouse who wants out. Strange how that works, isn't it?
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!