Hi, I'd like to help you with your question.
It sounds like your boyfriend has a history of cheating and continues his behavior even now. It does not seem that he feels he needs to stop cheating, even when you know about his behavior.
It is important that you talk with him about your feelings and let him know what you intend to do about the situation. If you are feeling that he has no intention of fixing the situation, then it is completely up to you to decide what to do. However, a relationship without trust as a basic foundation has almost no chance of being successful unless it is dysfunctional.
You have a few options. You can stay, and live with the behavior. This is not a healthy choice because it means you do not have trust in your relationship and it also puts you at risk for sexually transmitted diseases. It also creates an unstable home for your children. But for some people, this is a viable option so it needs presented.
Two, you can stay but insist on counseling. You both can try to work on the issue with a therapist to determine his willingness to stop his behavior and work on your relationship.
Three, you can leave the relationship. It depends on whether or not you feel you can do this. However, seeing a therapist on your own and building support with family and friends can help you make the transition from the relationship.
Here is a book that may help you with your decision. It is called Too Good to Leave, Too Bad to Stay: A Step-by-Step Guide to Help You Decide Whether to Stay In or Get Out of Your Relationship by Mira Kirshenbaum. You can find it on Amazon.com or your local library may have it available.
I hope this has helped you,
Without being able to speak to your boyfriend directly, there is no way to tell for sure how he feels. However, you may want to take his past behavior and current behavior as a sign of how he feels. Any relationship outside of your relationship with him, even if it's emotional, is a sign that he is not committed to you and his relationship with you. It is also not a good sign that his relationship with this person has gone on this long.
Also, you had an excellent point. If this relationship was nothing more than a friendship, there would be no reason to hide it. And, if it was a friendship, you would be included in the friendship. This is what you need to take a look at when deciding what action you want to take.
You have good insight into this situation. It is just a matter of what you want to do with it.