Your neighbor may have convinced herself that she's making the right decisions regarding her actions, but someday those decisions will come back to haunt her, for they can only lead to regret and unhappiness and insecurity.
Bad decisions always lead to bad consequences, and right now she's making some very bad decisions, regardless of what she thinks. Not only will she wreck two families if she goes ahead with this, but she will also be sowing the seeds of her own sorrow -- or even destruction.
After all, how does she know this man won't betray her someday, the same way he's betraying his own family right now? And she could do the same to him. In other words, the stability and security that God wants for every marriage simply won't be there -- nor can it be. The writer of the Old Testament book of Ecclesiastes declared, "I find more bitter than death the woman who is a snare, whose heart is a trap and whose hands are chains" (Ecclesiastes 7:26).
Ask God to give you wisdom, and also to have the courage to confront her with the wrongness of what she's doing -- not only in the eyes of her family but in the eyes of God. Then urge her to turn to Jesus Christ for the forgiveness and new start in life that she needs. Her marriage can be restored -- with God's help, and with the encouragement of friends like you.