I'm married with kids, 32f, and we recently had the talk about the blurry line between friendly work banter and flirting, and full on flirting.
Your wife sounds either very immature, but what she is not, is oblivious. The escalation of events was perhaps not intentional, but she did not remain within appropriate boundaries either.
In our marriage, we had an open phone policy, but there never was a need to check up on each other. I find it hilarious some people suggest an open phone policy to be controlling, when it is more a token of trust which remains unused until there is an incident where one partner sadly has showed to be untrustworthy.
So the token usually remains unused, because there is no need to check up on anything. Frankly speaking, I don't want or need to know what kind of banter is being shared, until that banter turns into something different altogether, and instead of a partner you find yourself with a wayward spouse, refusing to return to old. Sadly, that is where you are at.
I am funnily enough in a similar situation where my spouse suddenly revoked the open phone policy. Years and months before today, he usually just took my phone and read through all my banter, but also read through my deeply private conversations with my female bff of 16 years, laughing at her personal problems. And worse, judging me for my humor and explaining to me how much of myself I should or should not invest in a friendship. He admitted there was zero inappropriate talk, but still he found fault, and still kept pressing to read every little thing I shared. Now this level of control, I do not approve.
We had to reestablish boundaries. At that point he crossed a line and abused the open phone policy, and I pulled back. Because he however, kept invading my privacy, I revoked the policy one sidedly entirely, and now he did so too ''to make us even''. But he just pulled back, suddenly. The timing is not unsurprising though, because he is the one flirting with a colleague, remaining barely within the appropriate, as his dear siblings who work with him could share. And actively hiding it, as he had told me about all his colleagues except her and messaged her, but luckily not going as far as deleting the messages. (Found out about this through family). I never called him out on it, but now I don't even know whether it will escalate or not because he is guarding his phone.
Truth be told, I understand the disappointment. Our spouses should be grown ass adults. I have suggested to my husband to find some friends, do something he likes, start a hobby. All things I already do, while he sometimes mopes around not knowing what to do, demanding I spend every waking moment with him. The need for this external validation and flirtation is downright... disappointing. Deeply so, because it ruins a good part of the image I had of my spouse. And I do believe in platonic friendship between males and females. I have a male friend who he knows, who visits, and who - if he dares to flirt - is shut down immediatly. A friend, who never had a problem with meeting him and the other way around. Hell, they even game together. I just don't seem to be granted the same loyalty, because the missus in his case is fishing for one on one encounters, going as far as suggestion ''the spouses would make things awkward''.
I've no idea how to proceed either. Deescalation has started because the lady in question left the company and he no longer validates her, even though she sporadically keeps pressing. So in my case, the problem seems to have fizzled out by itself, but the way my spouse handled it and never spoke of it to begin with, left a bad taste in my mouth. Especially because he has shown himself to be capable of infidelity in the far past. And it has pushed me towards a rather negative headspace and image of him.
I want to work on this, but similarly like you, at some point in your life, you are just done with the drama. I do suggest however, if you find the strentgh, to have a final chat about this, because there is a child in the mix. Perhaps explain how much of a dealbreaker it is, to put yourself in a situation as a married person, where you almost invite indecensies to happen because you find yourself bored with life. Maybe emphasize how unattractive a quality you find this, and explain what she stands to lose.