Thanks for the input all. After sleeping on it, or at least attempting to do so, i am not going to say anything, she also won't confess because firstly, she is not in the right spot emotionally to do so, and secondly telling him won't save the relationship which it appears she does actually want. He will leave immediately if he finds out, he is very very strong in his views over such things.
The only thing i am going to do is to continue to work with her to get out of her current denial stage (long story) and into a spot where she can move on and do all the right things.
If she continues to do it though then i don't know, i'm thinking a rethink to how i approach it will be in order.
Also not going to tell the wife, she is the least of my problems in all of this, i know how she will react and she will be good after an initial short period of being a bit p*ssed because she knows what i am like and will understand the confliction and the subsequent decision to not share, she will be more shocked about it all i think just as i was.
If he finds out though, that's a whole different story. The other guy is not yet aware i know either, i am also not planning on telling him that i do, she can if she wants but there is probably little to gain from that either.
Haven't seen the Husband since i found out, we are all having a party for Australia day weekend though... He's completely unsuspecting so he won't be looking for any signs but i am going to be paranoid as, at least initially, that he can see i know something.
Thank f*ck for beer !!