I would be happy to help.
First of all, this is definitely not faulty reasoning on your part. Your girlfriend is not being fair to you, or even logical in her decision to stay in contact with this man. A sexual contact was made with him. That changed the nature and intimacy level of the relationship. Simply said, a personal boundary has been crossed and if she wants to be with you in a serious relationship she must not have contact with him. It is callous and unreasonable on her part to even think that this is acceptable.
What to do?
You are in the right here, but to giver her the best chance of working this out, I would have a conversation with her that uses a lot of "I" statements: I feel; I think: etc about your position on this. (Ex: I am not comfortable with you having any contact with this man. If you are serious about us, I need this relationship with him totally end, (even as a friendship) because of what happened between you.)
If she refuses to do this, sadly, you have an answer about her true intentions and feelings. She cannot have both you and a friendship with this person. It will not work, and cannot work. And the only way to have a chance at repairing you both is if she agrees to stop seeing him, even as a friend. Steven