I am so sorry to read your story, Mindset. An unconfessed affair in the distance past, kept secret by your wife for so long, is especially worrisome.
Take nothing your wife says for granted. Nothing. You may feel an overwhelming desire to believe her account. Suppress it.
I hate to even suggest this, but if she was willing to engage in an affair before you had a son, yet she never confessed it, you might even need to consider the possibility of other affairs during the marriage and the possibility that your son is not your own. (I don't assume this! It's unlikely, but just know anything is possible. Love him no matter what.)
I really hope this isn't true, and I don't mean by suggesting it to freak you out. Just don't take anything for granted beyond the fact that your wife is a serial and remorseless liar and has been for nearly your entire marriage. The fact that she'd ask a secret former affair partner to be your son's godfather seems especially reckless. Creating new ways to bind old affair partners to your marriage and family is devious and stupid.
My $.02 advice?
1) I STRONGLY recommend you do not start online dating right now, however tempting it might be... The temptation may be strong- whether the motivation is loneliness, revenge, or reasserting your manhood. But you are in an especially vulnerable state right now and your marriage is in total crisis. You don't want to complicate this equation any further!
2) Be a pillar of strength and an example of paternal dignity to your son (and other children, if you have them). Protect him/them from the fallout as best you can. This is SO IMPORTANT. I know you are deeply wounded, but PLEASE put his/their needs ahead of your own and keep them out of the conflict as best you can while assuring him/love of your love. If an infidelity-caused divorce is coming, he/they will experience trauma that will impact him/them for decades to come. If you need a primer on that, read the account by "yearsofpain25":
http://www.survivinginfidelity.com/forums.asp?tid=519401
3) If you want to show your wife your true worth, move to divorce her. Do not attempt to "settle the score" with a revenge affair. Doing this only lowers you to her level (which she might want!). If you have been faithful to her, this will rob you of your position of moral authority, set a terrible example for your son, and certainly doom any dim hopes of a future restoration of your marriage.
You need to run like hell from her. She needs to know you're doing it because you deserve better than a serial liar and cheater. (If you've been honest with and faithful to her, you DO deserve better!) She does not respect you or value you, and she may never really know your true worth until she sees you disappearing over the horizon line, in search of a better life with a better wife.
If she's going to ever have any hope of catching up with you, she'll have to drop the decade's worth of lies, secrets and self-deceptions that weigh her down and run empty-handed and weeping to catch up with you. There is no hope of true reconciliation until she truly values your worth and fully understands that her lies and betrayals have made her truly unworthy of you.
It can happen. It does happen. I want it to happen for you like it happened for me, but your wife will have to drop a lot more and run a lot further to earn that. True forgiveness is not possible without her first showing genuine contrition and complete brokenness. Your future marriage will not endure absent this foundation.
Please keep us posted, Mindset, and know, even in the midst of your terrible pain, that there are others here who understand your agony and we are rooting for your restoration.