Nothing "happened" to her. Not to belabor the point, but she was always unstable, irresponsible, and manipulative. You just were besotted by her and chose to believe the image she projected of herself and not the evidence of who she was. I also get the impression that you have a bad case of KISA (Knight in Shining Armour) syndrome. You see yourself as someone who can save a damsel from herself. You can't.
I get that your hesitancy to file is mainly because there are children involved, but they are not yours and you haven't legally adopted them, correct? I know you love them and I admire you for being a devoted stepfather to them, but the reality is that she could pack up tomorrow and cut you out of their lives and there is absolutely nothing you could do about it.
So I'm going to ask again: Where is their father? If he's still involved in their lives, is a decent man (ie, not a criminal), and has visitation/shared custody, then he needs to be made aware of what's going on in his children's lives. If the mother of your kids were shirking her responsibilities, wouldn't you want to know? Maybe they would be better off living with him, if that's an option.
Also, if you think you're doing the kids any favors by picking up the parenting slack for her, you're wrong. All you're doing is enabling her bad behavior. In your position, I would tell her: "I'm going to stay at a hotel this week (or I have plans for the weekend). If you have dates or any late nights planned, you'll need to stay home and get a babysitter." Again, if she wants to live like a single woman while she's married to you, then she needs to assume the burdens of a single woman-- not enjoy all the perks of being married (ie, using you as a babysitting service) while she fucks around.
I know you don't want to screw those kids up and make them feel as if you're abandoning them but the reality is that their mother is only married to you on paper. As soon as she finds another guy who wants to be her KISA and is willing to play house with her, you will be out of the picture.
I guess my biggest question is still how I get past these stupid intrusive thoughts (about our once shared world and her being with other, somehow more preferable men) and my distrust of women. I know time will help but it's going to be such an uphill battle.
The first part is easy. Once you're no longer living with her and are divorced, the intrusive thoughts will eventually fade because you're no longer being subjected to a daily dose of manipulation and humiliation. With time and distance, you will see her for the trainwreck she is. Rather than thinking that other men might be better than you, you will pity the next poor bastard that gets reeled into her spider's web.
As for distrusting women, that will be less of an issue once you focus on your own healing and self awareness and learn to trust yourself again. As you said, you've married two women that have cheated on you. That's not a statement on your value as a man but in your ability to judge a person's character.
After my divorce, I focused much less on what people said about themselves and much more about how they behaved. And most importantly at all, I stopped making excuses for other people completely. I took relationships slow and, at the nearest sign that something was "off", I took off.
My husband now isn't perfection by any means, but over the 2-year span that we dated before marriage there was never a point where his words and his actions weren't aligned. He almost never talked about his Christian values (as my ex frequently did)... but he lived them in his every day words and his interactions. And our romance was not fireworks and explosions (as it was with my ex and, I suspect, as it was with you and your wife) but a slow fire that has built into an enduring flame.
[This message edited by BluerThanBlue at 2:39 PM, Monday, December 8th]