I do wonder how many other couples are having sexless marriages? I think that this is a much bigger problem than anyone lets on.
I really related to what anonamater was saying. We've had problems too and it's been/is hard to make my dh understand that I don't necessarily want to have sex the moment we wake up or just after we stumble into bed. I need to feel wanted and loved and all those little things anonamater was talking about really do count. I think it's one of the fundamental differences between men and women. Men would be satisified (generally speaking) with a quickie nearly all the time, whereas women need sex to begin way before they even hit the bed. I cannot go from watching a DVD with dh and having a casual conversation to full on sex. It just doesn't work like that. I don't think even now that dh quite understands that. He thinks it's just me being awkward.
I'm going to go against the flow here and say DON'T tell her about this other girl. If she's suffering from low self esteem and a bit of depression that information may well just push her further away from you.
Instead what I would do is to write down everything that you feel. Everything you've said here about how miserable you are, about how much you miss her and how hard it is to bring all this into the open. Tell her that you are afraid of upsetting her, afraid of hurting her but you feel that you are both hurting. Tell her what it feels like inside, that pain of rejection, that misery.
Then either give it to her to read by herself or give it to your counsellor at the next session.
Letters are much better because there can be no misunderstandings and no recriminations. Instead she can take her time to read your words and dwell on their meaning.
Arrange a babysitter, book a table at a restaurant and discuss the contents of the letter with her. Calmly and gently. If she gets defensive, angry or upset it's important that you remain calm and don't argue back. Because situations like this are raw with emotion and I would suggest tackling it somewhere like a restaurant because you do have to reign yourself in then, you can't have an all-out bargy in front of the kids. You are forced to be civilised and calm and because neither of you can storm out (well not without causing a scene) you are both forced to confront the issues and hear each other out.
Yes it may well be painful for you and her, but this situation is not without pain and the longer you leave it, the more painful it is becoming. I doubt very much that she can be happy with the situation. Perhaps she feels unable to talk to you about it for the very fears that you describe. Don't think that she is perfectly content to live life this way, trust me she won't be. She must know that this is not the way things are meant to be and she will be having similar thoughts to you, which is why it's so frustrating that you are not both communicating. I mean, this is a the massive elephant in the room isn't it? You both know there is something wrong but neither of you are willing to confront it.
Write that letter. Book that restaurant. The worse case scenario is that she refuses to go and refuses to talk. Well then at least if she keeps the letter she is reminded of how you feel and you don't have to carry on pretending everything is ok.
I think you are scared that if you say something, you are giving her the opportunity to call time on the relationship, but if she was going to do that, she would have done so by now. Perhaps that is what she is scared of too? She obviously does think the marriage is worth saving or she would not have gone to counselling sessions with you. By confronting the issue you are telling her that you care and that may be all she needs to hear. You've taken the first step, you've opened up on here and that must have taken guts. Now take a deep breath and take the next step. You never know, this may be the happiest Christmas you've had in a long time, but you need to make that happen.
No more excuses, you've a marriage to save.