Thank you for your input ChipperMonkey.

I also fear that my wife is simply saying that it is my decision because she doesn't want to tell me what to do.

I understand your perspective; to put this question in writing makes the answer seem obvious. Of course if I am staying with my wife I shouldn't continue a friendship with the woman I cheated on her with. However, relationship are not that simple. Not everything is black and white.

You are incorrect that my wife was not aware of the mutual attraction between my friend and I, we discussed it more than once and I was always the one to bring it up (like I said my wife is not a jealous person) to make sure she was ok with everything.

Then again if I had ended the friendship when I thought my wife might be uncomfortable, I would not be in this situation now. Maybe I am just inviting trouble be keeping this woman in my life.