Just wanted to give an update to those of you kind enough to reply, but before I do that I want to thank everyone for their postings as each one has been valuable to me in different ways. To those who recognised my feelings of being unsettled, and sympathised with that, I want to say that this is probably the single most important thing I needed at that time.
Anyway, the upshot is, I talked to my husband about this, and I believe him when he says that this is a friendship (not a love affair or a physical affair). It appears that this friendship has gotten a bit out of hand though. He has agreed not to see her anymore. I couldn't really work out what she was getting out of this strange relationship (other than money (!)) until I read about the 'damsel in distress' thing which some women do. I feel sorry for my husband (and myself, of course) that he has probably been a bit manipulated. As for reporting her, I am not that sort of person to ruin someone else's life, although I recognise that in not reporting her I may be allowing her to repeat her behavior in the future. Tis a conundrum for me. Why can't people just be decent?! Anyway, thanks all, what a valuable forum