Because you work with her, I would let it fade. Treat her the way you would treat any work acquaintance, politely. I would not confront her given the whole dynamic you described. The situation is too volatile. I also would not say anything negative about her boyfriend -- I get the feeling that she tells him what you say and that's why he is sort of cool with you at work.

This could also be a temporary break in your friendship rather than a complete ending, if that worked for you. Would you want to resume some sort of relationship if she came to her senses and ended this affair? Sooner or later it's going to blow up and she may come looking for you...

In terms of letting it fade, I would busy myself with new friends and/or new social situations. Take a class. Be too busy to think about her or see her. Losing people we once loved and spent a lot of time with is hard and it just takes time to get over it.