What to do when you find out you are the other guy

A few months ago I met Sarah (not her real name) and we really hit it off and became good friends. Especially in Corona time it was good to have someone in your bubble to take long walks with, watch a movie, share a meal, etc. She would occasionally even spend the night but then in the guest room. You see I respectfully kept my distance as Sarah was struggling with an unresolved relationship. She had been with Craig (not his real name either..) for many years and about 2 years ago they moved back to his home country so her could be closer to his ailing father. Unfortunately the move did not work out well for Sarah. Craig, as he had done in the past, did not want to discuss starting a family and as they now lived in a village, there was no work for her nor a social life. So last year she decided to move back here and left him behind. She seemed to be struggling with the situation and would often tell me "i should stop calling him my boyfriend" or "I don't know if I still have a boyfriend". When I asked her she said that as they had never had a real conversation about her departure or their future she never had any closure and couldn't move forward. So life went on and we grew closer and closer until the inevitable happened and our relationship turned into a physical and emotional one. We even imagined a life together once she had her life sorted out in regards to Craig, her new apartment, her job situation. There were some hurdles to overcome as I am 14 years older than her and where she has never had children, I already have two teenage daughters and am not open to having move kids as i am over 50. But still this seemed to be something she could possibly live with and she even spoke about me with her mother and with a close friend. Only in our social circle we kept it a secret. So then I received the news that Craig was coming to visit Sarah. Hew would be bringing her the rest of her stuff which she had left behind and in my mind I was happy as I was hoping that she could finally have the discussion with him and find closure. I of course als realized that it could go the other way and that they would reconcile but that was something I believed I was prepared for. What I was not prepared for was that the day Craig arrived was the day our communication broke down. She has basically stopped talking to me. Yes she did reach out to me to ask how I was doing and tell me about new furniture she had got for her apartment but not a word about Craig. So I asked her if she had found closure and her reply surprised me. She said that they were both avoiding the conversation. I was confused as I thought that this was the whole point of the visit. I said I would like to talk to her face to face but she said it was difficult as long as Craig was here. That she wanted to be a bit more quiet and focus on her apartment. That she was thinking about me and that she was confused. Then it struck me; where I thought I was the next guy or perhaps the rebound guy I was in fact the other guy. That the relationship had never really been over with Craig and that, as far as I knew, they had just picked up where they had left off in a way. That she was, I guess, cheating on him with me. And as I myself am divorced from a woman who had cheated on me, I felt really bad about myself. Honestly I do not entirely blame her, just myself, for being so naive and basically hearing what I wanted to hear. Maybe if I had talked more about her relationship with Craig I would have realized it. Now I am faced with knowing that Craig will be returning home in a week and we will have the inevitable conversation about what just happened these past two weeks and it scares me. I've always tried to be the good guy and honestly that never seemed to get me anywhere. It always seems that they guys who don't care and just go for what they want are the guys who actually get what they want. So what to do? Be confrontational? Or try to win her back? Ignore it all? At the moment I'm lost. So any shared stories or advice would be greatly appreciated. And it already helps that I could share my story so thank you.

So I thought I would give an update on the situation. So once Craig had left, I went to see Sarah and to be honest we just picked up where we had left off. We have spoken at length about the situation and she has been very honest with me. In short she wants a family and is somehow still clinging to Craig as she fears he is her best chance. Therefore they have still not formally broken up and in fact she will be visiting him next month. As I know people who have had to remain childless I understand the dilemma and also my role in all of this. As I can no longer have kids, I am not an option for now and we are providing each other with the emotional support we both need. I have made the choice to accept it as it is better than being alone.