T--I hope you don't mind my 2 cents here. I have been following your thread a little and I can't help but notice you seem to be focusing quite a bit on what she needs to do. I agree she needs to do some work--however, you cannot make that happen. Please focus on you and what you can do to be the kind of person you want to be (unless, of course, you feel pretty good about yourself the way you are).
Would it have really been so bad to hug her back? She took a little baby step there. Does pulling away from her when you are not pleased with her behavior change anything? Does it bring her closer to you?
Reminding her of the things she doesn't do (like not playing with the kids)--does that help? Would it help if you were playing with the kids and made a way for her to participate in what you all were doing?
She really doesn't know why she does what she does, and you probably don't either. She will have to figure that out. Are you willing to be her friend and support her during that time? She is confused, and probably feels guilty and disappointed in herself. What if you act as if you are happy to see her, talk to her, etc.? What if you told her you knew she was confused and you knew it was hurting her? What if you could forgive her and have patience with her while she tries to figure herself out?
Please be careful with the FF. Don't do anything you will regret later. You are getting a need met there that your W can't meet right now. FF may be making you feel good about yourself. What if you could do something to make yourself feel better instead of looking elsewhere for that reassurance and confidence in yourself.
I might be way off here, but some of this reminds me of me.