It all started 1 1/2 years ago. I found out my husband was having an affair with our neighbor who is 10 years younger than we are. She would also babysit our son who is now 5 years old. I was told the cheatting lasted 6 weeks and she would go to his work and they would have car sex. We have been married since 2006 and have a young child so we decided to work on our relationship. Some days are good some days I just want to leave. I have set the rules as no contact with her. But she lives next door and its hard to not see her. I'm not over it all. I don't fully trust my husband, but its getting better and I am stiill full of resentment. My newest issue is that my son has a new friend that lives very close to us and he really wants to go play with her. But the girls father is good friends with the neighbor who has a child too and they play together. I don't want to deny my son. But I can't stand the thought of coming face to face with her. I'm just not sure what to do at this point. Any advice or words of wisdom is appreciated.
Moving is not an option at this point.

Welcome to Marriage Builders, sin.
I'm sorry this terrible thing has happened to you. If you have read the articles on this site for recovering from an affair, you will have seen that No Contact between the affair partners is required. This business of living next door to OW isn't going to work. You will be continually triggered with every sighting of her, and the chance of the affair reigniting will remain constant as long as you live there.
Why do you say moving isn't an option? If you were informed that you were living next to a toxic waste dump that would kill you within months, would you waffle over whether moving was an option or not? Do you realize that your marriage is in an equivalent state right now? It is critical that you get away from that woman if you hope to save your sanity and your marriage.
I don't want to deny my son.
I don't want to sound mean, here, but I think your reasoning is skewed. YOU aren't denying your son of anything. This is a repercussion of your WH's affair. By keeping your son away from any interaction with OW or her family, YOU are protecting your son by protecting his family.
How old is your son? If he is over the age of four, he should be told of the affair in age-appropriate language, so he knows that OW is an enemy of your family and must be avoided. You don't want him to believe that any of this is HIS fault. He may also be concerned that he has done something to cause the tension is your home that he surely has felt.
How about OW? Is she married?
Have you read the "Start Here" thread at the top of this forum?