Yes, she cheated. She became emotionally involved with someone other than you.
she felt like our marriage just wasn't as passionate as it could be, she wanted more sex, but it wasn't my fault, that I am a great lover and she knows I've been working full time and going to school full time and still paying all our bills and managing our house. But she went.
we do actually have a happy marriage, I don't know exactly why she did this. We are sexually active and the sex is good, I am exceedingly attentive to her day and night. I treat her like a princess. I write lovey notes in her lunch box sometimes. In English 101 in college this past semester, we had to write an essay on our idea of paradise and mine was just three pages of talking about laying in bed with my wife (It got an A if that matters.) She hung that essay up on the refrigerator. We go on dates and to the movies, even when I am ridiculously busy. We had been on a nice date just the night before.
It seems to me that you both have a very different perception of your relationship. Maybe your communication between yourselves needs to improve so you can both feel that your needs are being met. Probably you have been busy with working and school and despite your perception of attentiveness toward her, her perception is that it isn't what she needs. Maybe she is bored with a perceived lack of attention. Maybe your previous level of attention "spoiled" her and she is acting out in an effort to get attention.
I agree that counselling is imperative. If she says it is "over" with the other guy, she needs to prove it. At the very least, she needs to transfer to a different department within the company she works for so she does not have to deal with the other guy, and if that's not possible, she needs to get another job ASAP. The other thing she needs to address is her naïveté and how she was able to so easily fall for the guy-going-through-a-terrible-divorce-just-looking-for-someone-to-talk-to crap. That is so cliché that it's silly. The first time that guy paid obvious and "awkward" attention to her should have been the LAST time. You didn't mention how long that had been going on prior to it leading up to her going to his place, gussied up in fancy underwear, but there was encouragement on her part and definitely no discouragement from her, or it never would have gone that far. When you don't like that kind of attention from a man in a workplace situation, it's very simple to say "Knock it off, I don't appreciate you doing that" and then file a complaint for sexual harassment if it continues. When you don't want that kind of attention in the workplace, you don't ramp things up by wearing special underwear or respond positively to the attention or agreeing to spend time beyond your work duties with the person who is paying you that kind of attention.
Maybe you need to ask her if she wants out of the marriage, or wants out of the JWs, or both and was using this as a means to an end. It wouldn't be unheard of for someone to do that, even within the JWs. She cheats, gets DFd (although no intercourse may only get her Reproved™), gets Scripturally Divorced™, eventually gets Reinstated™, and is free to remarry. I've heard of cases where a couple goes to the Elders™, one confesses to Adultery™ so they can get a Scriptural Divorce™, the confessor gets DFd (the one with the least to lose socially), and then the other fades because of "depression" or "stress". Both then can pursue new relationships with non-JWs.
You know your wife better than we do, so you'd probably have a better handle on her motivations and any underlying desires to leave the JWs. Even if you think you have answers from her, you owe it to yourselves to get some counselling so that you both have all your cards on the table in order to make a fresh start if that is what you both want.