Steve, she knows what she did was wrong, otherwise why lie about it. So I'm not buying her story that it helps your relationship and that she is fine with continuing it whether you like it or not. And honestly I think the lying is WAY worse than the convo she had with the guy (or at least the ones you saw). She's being defiant, selfish and rebellious. This is clearly not something you can tolerate, so it's good that you let her know this. How you deal with it would be similar to dealing with a rebellious teen, and there are a lot of good resources on the internet for that so you might Google "dealing with teen defiance" and do some reading. Some of it is specifically parent/ child but a lot of it fits for dealing with a WW too.