I do not understand why she feels the necessity to stay with a man who does not satisfy her. She says she loves him, but there is no intimacy.I never heard you mention children which is always a reason to try and make a marriage work. So if this woman has love and sex with you why not commit to you? And why was the husband so upset to find out about her 2nd relationship if she discussed it with him and he okayed it!? I had a relationship with a married man once. He was supposedly misunderstood and did not sleep with her etc etc.. All lies. I am not saying this woman is lying about everything, but she is not telling you everything. I dont think she is being totally honest with her husband either.
If her marriage was not giving her what she wanted or needed either they should go for counseling or get out of the relationship. In the mean time you are hanging on to this relationship and spending time with her when you could meet someone available. Someone who could be there all night and on Holidays too! If you do not want to give her an ultimatum at least set a time frame in your own mind. Set a time of how long you want to give her to make a decision. You sound like a wonderful guy who could be with any woman that could be only yours. Good luck. I hope you are not deeply hurt by this relationship. And I hope everything goes smooth since you work together.