Doc,
Welcome to MB. I know your going nuts right now but your situation is soooo familiar to many here. Your wife's response to you is textbook WS (wayward spouse). She is attempting to deceive you by downplaying their friendship. You see...you are ruining her life. She thought she was going to have some fun with this guy and you were never supposed to find out. Next she'll be attacking you for trying to interfere with her friendship, that your a lunatic, irrational, jealous husband and/or that you are soooo controlling...telling her who she can and can not be friends with, etc..
I suggest you take your thread over to Infidelity-General Questions II. That board is much more active and you'll likely get many more responses there as we assist you with your, more likely than not, marital reconciliation.
You should go to the main site and purchase Surviving an Affair and His Needs/Her Needs. These books will assist you with making sense of the situation you find yourself in and help you recover your marriage should that be your choice.
Your wife will probably continue to deny, deny, deny. I know it will be hard for you to not trust this woman but they nearly never tell the truth at first. You may need to obtain additional evidence and since they carry on phone conversations while you are at work the best way I found to get the evidence needed to draw out the truth is to the following. Go to Radio Shack and purchase a VOICE ACTIVATED DIGITAL VOICE RECORDER (not the cassette type). Buy it with cash so no record of it's purchase can be located. Never acknowledge using it as it may not be legal in your state. Hide the recorder in your home or in her car up under the passenger seat. You'll get all the info you need. I warn you it may not be pretty. A wayward spouse is an alien that will likely tell OM a lot of things that are not true about you in order to further entice OM. WS's also rewrite their marital history to "legitimize" their behavior. We call it "FOGTALK". Don't let it get you down. You will more likely than not get your wife back and fully recover.
I hope and wish I was overreacting but I think you know there is a lot more to this than a little inappropriateness. I know you thought if you busted her she would come clean and end this thing but that rarely happens. Affair busting and recovery are a process and MB is the best known solution to that problem. Welcome aboard.
Good luck and see you over on GQII,
Mr. Wondering