i had pnd - maybe i still have a touch of this. my baby is now 2 and a very bad sleeper and we co sleep and my husband sleeps in another room. reading your post i totally recognise myself in you describing your wife.
i don't have anything much more to add than what has been said already but that i found having a baby ALL consuming for me. My dh is completely pushed to the background, our relationship is on hold really. infact i'm only considering renewing relations because i want another baby!
but my dh has been very supportive, by taking a completely passive backseat really and letting me do what i think is right for the baby (he is quite passive anyway) but i greatly appreciate this because i have found motherhood quite overwhelming and also i am very pro attatchment parenting, breastfed for 22 months as baby dairy intolerant too.
i have in many ways rendered my dh useless, which cannot be easy for him, (he is a bit useless though), infact it was only when i stopped breastfeeding that i really felt recovered from pnd - not that i am in anyway suggesting that you tell your wife to give up breastfeeding.
basically what i am saying is that i recognise how your wife is feeling, and i thank you for making me realise how my husband is feeling, but i would say that if you are in anyway asking your wife to choose what you want and what she wants to do with the baby she will choose the baby all the time.
i'm not sure what you should do really, but just to say for me it is beginning to pass and it takes a long time and i hope it works out ok.
non sleep is a nightmare, i haven't slept one night in two years and i work full time - my dh now does child care full time - which i hate him for.
its really tough but it will get better