This is definitely not the typical dating a married man story and I won't throw stones at you.
I swear this sounds familiar....in the sense that my good friend was dating a guy and learned that he was married. His WIFE showed up in NYC (she did not live here) and said something similar, we are married but we both do our "own thing". The wife told my friend to keep on dating him and that she had her own life (in a different state) and she did not want him. By the way, this confrontation (if you can even call it that) took place while my friend was at his house.
My friend dumped him and RAN as fast as she could. He never mentioned that he was married. I have no idea if the guy and his wife ever divorced.
It's amazing to me the number of people that are married, but living separate lives. I have at least one in-law who is still married although he and his wife have lived separate lives for at least 20 years.
I think you need to separate yourself from this messy situation. It's just not good for you to deal with him until he sorts out his marriage. If he actually leaves his wife and gets a divorce you might consider dating him again; however, since they are married I think it would be best for you to step out of this situation and let them work it out (or divorce).
Funny how she is only looking to stay in her marriage since her lover left her. I know of someone else going through this, friend of a colleague. From what I was told, she is married and was caught on camera having sex with a coworker. Too bad her husband's friend owns the company and showed him the tape (her dress was still on). They are now separated and her lover has left her too (married lover). She currently says she does not want to be married although her husband is willing to work it out. I could totally see this scenario playing out with them too if her husband starts to date. Just messy!!