Sorry squid1035, but you have red flags, red flares and rail-road crossing signs with big red flashing lights.
Seems like she started checking herself out 3 years ago. You have a room-mate you don't even have sex with. You even checked out yourself to some degree and as you stated, the kids already know.
There is a chance that when she had her meltdown, what really happened is that she was having an affair - got found out, and the other man broke up with your wife and went back to his marriage.
Right now, she's getting intimacy and far more likely than not - sex. Her answers to your questions seems to show it. Her reactions to her phone prove it. Cheaters keep their phones next to them and lock them up.
So I'll repeat what the others are saying.
1 - Go to a lawyer and get your ducks in order, see what your options are and prepare to file. You want to file first, don't wait for her to do it to you. She now knows that YOU are suspicious and seeing that the end is near.
2 - Come up with two plans. A nice quick divorce... you tell her "go have your freedom with Matt or whoever or life" - and you get the kids. If she goes for quick and easy, she can start her new life now and let you be the primary, you get the house and get the kids to school and keep their friends. Optional, she can have the guest room when she is passing through town - but otherwise, doesn't live there.
Plan B : she becomes evil crazy woman and wants the kids, the house, the money, etc. Which means, more money, time and aggravation. Hope she goes for Plan A, makes it quick and less stressful for the kids... so much faster and you both can remain as "friends" and will present the divorce as a united front that things have been over for a while and it's not the kids' fault. She moves out and you start dating,etc.
If she agreed with this, say "okay I'll have the lawyer draw up papers, we go into mediation" and the whole thing may cost you about $2000 in lawyer paper work, $500~2500 for mediation and $200~400 to file.
3 - You do 180 today.
4 - Go to the gym... loose weight. Look for new social activities to do with other guys and meet people in general. Do the gym first for about a month to lose 10 lbs or so before hitting the social life. Since you have a 16 and 17 yr old, they can watch the 11yr old when you go out every other weekend-night or whatever.
5 - Go to a stripper bar, have fun. You deserve it. Go by yourself or go with friends. IMHO, this helps to reintroduce you to women... not so drooling on your first dates.
This looks good for you, your wayward wife and your children. They will prefer to see you both HAPPY than you both being miserable.