Yep. I think OP is furious with him - as she should be - but is doing what many women do and blaming the other woman rather than putting the blame on the one who is actually betraying her.
Granted, it's not a cheating scenario, but it's definitely awful of him to flirt with some woman who's deliberately ignoring his wife, right in front of her too. And there's no chance at all he doesn't notice, the whole "she's so nice" schtick is an attempt to deflect what he knows OP is thinking and wants to say.
My husband and I went to a friend's anniversary get together a while back, it was a kind of garden party affair, people moving around chatting, lots of tables, people getting up and down, we knew some people and some we didn't.
After a while, we found ourselves a quiet table and were sitting cosily chatting when a strange woman plonked herself beside my husband, round his side of the table. She said, oh is it ok if it here mostly to him but kind of in my direction - I answered sure, of course. She claimed not to know anyone - that turned out to be a lie a bunch of women on the other side of the room knew her a we found out later.
She then pretty much immediately started ostentatiously flirting with him. It was actually bizarre. She actually asked him if he thought her top was too low cut - I laughed, adjusted my own not inconsiderable cleavage and said "If you've got it flaunt it" - she sort of glanced at me and then went back to entirely directing herself at him and ignoring me.
It was like something out of a comedy sketch and it was genuinely funny because first he looked startled, then he turned his seat towards me and ignored her and when she still attempted to engage he stood up and asked me to go to the bar with him, and we buggered off to wander around and talk to other people.
If he'd pretended not to notice that she was flirting and ignoring me, if he'd engaged with her and encouraged her I'd have accidentally spilled wine on his crotch and gone to find a friend to chat to (I maybe be joking, but probably not).
He'd never do this to me, and he didn't pretend to be clueless, he was just gobsmacked at her nerve, and so we both had a good laugh. Because we're on the same team.
Her husband is the one she should be angry at, not the woman who's flirty advances he's enjoying in front of his wife at her expense.