She needs space but I find that if we don't talk about our issues, I start to get very insecure
Recognize that your insecurity is being fed by your own fears and try to detach from that because it will undermine you. The key is, as you wrote, giving her space. Talking about issues at this point, as you know, will repel her and chase her away. Change the dynamics of all this by you pulling back. Read the DR book.
I did not think it was appropriate to have this man in a position where he could influence our relationship which led to a big fight.
You're absolutely right, but obviously she wants contact with this man. It suggests they're involved.
So, it didn't work out the way you expected... welcome back to this turmoil... she's going to do what she wants to do, you have to shrink her importance to you by GAL and detaching and being OK with yourself, not needing her. There's work for you to do.
I get more and more insecure about it with wild thought patterns as to what she is really up to.
Right. Our own imaginations are our own worst enemies. Stop dwelling on those thoughts, they will make you despair and will sabotage all your efforts, because how you concentrate on the relationship between the two of you, which is really the issue here, if you're contemplating all sorts of things that she may or may not be enjoying or doing with the OP that get you all emotionally choked and have you looking at her in a different way.
Also think about how you react to things... that tit for tat "I'll have an affair too" didn't help matters, it was a completely irresponsible and inappropriate response, so that, along with what else you've revealed about yourself, suggests to me that you may want to use more thinking about how you respond to adverse circumstances in your life.
So read the book and that will help answer some questions and give some direction, check out the success stories in these forums to see the common pattern of how these things are implemented, and good luck.