Am I dealing with a wayward or a WAW ? I don't really know how to tell..
Probably a WW. They are usually the ones that engage in affairs while continuing "family life" at home.
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is this "relationship" totally doomed
No, marriages have come back from far worse than this.
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and should I just say goodbye and thanks for what was ?
Yes, you absolutely should. Because she is 100% done (for now, that may change in the future but it'll be a while). In her mind there is zero chance of recon. So you too should call it done and get about the business of moving on. Quit putting up with all her "playing house" BS.
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however i woke last night from a shadow in the hallway, she was apparently looking at me and my daughter sleeping (she didn't notice I woke) she stood there observing us for 2 minutes after she came home from OM, before she silently went to the other end of the house to go to sleep - meaning of this ?
It's classic cake-eating. Goes out for a fling with OM and comes home to see you in bed with D and stops to think "oh they look so cozy, that's sweet!" The term cake-eating comes from the old saying "you can't have your cake and eat it too" as you probably know. She's having her cake (OM) and eating it too (family life). But if you eat your cake how can you also have it? She only can as long as you allow it.
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I found a old letter she wrote me 10 years ago, where I was about to leave her. She pleaded, begged and cried her heart out, asking for us to reconcile, and talk about things, not make hasty decisions and what not. I printed this out together with a letter stating, that I am going to be moving on now for the sake of myself and the kids
Good, now throw both of them away. DO NOT GIVE HER ANY LETTERS. DB'ing is all about showing changes through ACTIONS. Letters and talking do not work with a WW.