Sweetie, I didn't even have to read the entire thing to know your wife is still emotionally married to her ex. She does not respect you, does not respect your wants and needs. Let her remarry the jerk. 

A lot of former partners struggle to un-mesh their lives after break ups. When kids are involved it tends to be worse and persist longer. Sadly coming in so soon after the break up of thier marriage you have been lumbered with this. Sometimes it is just a phase and one or other of the former partners will start to enforce boundaries and stop leaning on each other as though they were still married but sometimes they never learn the lesson. Sometimes it is the introduction of  a new partner that helps to hurry up the emotional separation phase as either the new partner demands some boundaries or the ex partner  "punishes" the other one for moving on. It seems however that  your wife is unwilling to see her ex as an imposition in your lives and consider your feelings. And it seems that the ex does not see you as a threat (sadly probably because you are a woman) and so is happy to hang out at your house and ask favors from his ex. 

If you can get your wife to a couples therapist to help her see how this continiued enmeshment is not healthy for your relationship then that might help change things. 

I wrote this POS off when you mentioned T-1 diabetes as part of the reason for his crap.

That is crap.  Diabetes has zero impact on performance as an adult.  If there is anything on the planet that I am an expert in it is Type 1 diabetes.  Last month included the 39th anniversary of my Dx as a Type 1 diabetic.  Nothing infuriates me more than an adult who plays the T-1D card as an excuse for anything.  If a T-1D keeps their head in the game there is absolutely nothing about T-1D that limits their life opportunities or will prevent them from functioning as a viable adult. 

For kids... it can be a different story. This disease can be pure hell for kids.

I first ran into it in my first job after Engineering school.  After a year in the role the whole group was due to rotate into a new role when the company chose to move a group of us to night shift in the same role for an additional year.  That coworker played the T-1D card which was complete bullshit. I was called into our bosses office and quiried as to why I did not complain about going to night shift. I informed the boss and the boss's boss that I did complain since I had already accepted a position for my rotation and lost that opportunity due to the night shift crap but that there was absolutely nothing about T-1D that would prevent a person from working nights and anyone who claimed otherwise was full of shit.

That coworker rotated into a supervisory role and I went nuckin futz over that bullshit.

In the long run it all worked out as I got the job that she wanted to rotate into following the year I spent on night shift and she spent as a supervisor.  All of our coworkers knew her playing the T-1D card to avoid night shift was bullshit and made it no secret that they knew she was full of shit.

Grrrrrr.

Your DW needs to stop falling for her X's crap.  Catering to his crap using the excuse that she is doing it for the kids in complete bullshit.

Good luck.

Look it up.

Sure your wife is great - when it's not about something you aren't comfortable with and it's just good times.  Otherwise she ignores you completely, disregards your feelings, sends a ton of money to her ex and invites her ex INTO YOUR HOME when no one is there.

Id suggest you go to a counselor yourself to figure why on dogs green earth you'd put up with this blatant disrespect of you and your feelings.  She doesn't see a need to change because she keeps escalating things regardless of your talks with her.

If my SO had his ex in our house once our 10 yr relationship would be over.  

Please find yourself someone who actually loves and respects you.  You deserve to be treated fairly.

STOP.

That accomodating nature of yours is making everyone think its ok to keep on doing what they are doing and at every opportunity up the ante. What will you put up with next? HIs name on the deed to the house "for the kids sake"? "Lets build a cozy cottage for dear old dad so he can be CLOSE BY?" Seriously, when will it end and you put you foot down, or both feet?

I suggest some very open and honest communication and boundary setting:

1. OK, lets address all the $$$$$$ going out and financial enabling. Do you both have meshed finances? Thats YOUR money if yes. If not then you need to not spend your dollars fixing up and working the place.

2. Spending time in your castle as the resident royalty. This most certainly must stop. Find other options. Is this father REALLY a great example that kiddos need to learn from is this why they need to spend more time and cnosquently HE needs to be around. Seriously its either him or you at this point.

Good luck! Keep posting

How long after she threw him out did she meet and marry you? This all sounds very rushed.  What was the hurry?

She hasn't established any boundaries with this guy and just expects you to move in and accept it.  No new partner is going to accept the guy hanging out in the house willy-nilly, that's crazy. Not to mention the financial bail-outs.

I hope she at least put you on the deed of the house.

Oh hon, you're in a (toxic and not of your own choosing) poly relationship. Legitimately, not being flippant. If you and your wife agrees to be monogamous, she's cheating on you even if she isn't sleeping with her ex.

Your wife is getting all the benefit out of this, as is her ex, while you're just there to fill in the cracks. He can't keep a job or be reliable, but he's a "good" dad and available. He serves his function in that capacity, and in return gets to stay in his marital home and have his taxes done and get extra cash, etc. Just like if they were married.

You're stable with an income, so you're able to help pay for her first relationship with her ex. You have put money into her house that she is upside down on (and I would bet will have some excuse in the future about why you all shouldn't refinance and add you to the house). You give her sex. You fill her want for a female partner. You let her laugh and be happy. But you can't be a parent to her kids, so she'll bring in her ex to do that part.

Her life is golden! She doesn't need to worry about much because she has a Peter to rob so she can pay Paul, and since Peter is in love with her, she knows he'll never come back asking for all those robbed goods.

Regarding what's best for their kids, kids need to see their parents be strong people. They NEED to see their dad have a job, support himself, be able to pay his portion of their care, etc. Yes, they also need to see him, BUT they need to see their mother have boundaries with the man who sounds like he was a toxic a-hole to her (and still is). Parenting time is absolutely essential, but that can be split many different ways that allows BOTH parents to show how a failed marriage doesn't mean you're a failure forever. Dad is teaching his kids that you can be an a-hole and still get what you want, while Mom is showing them that someone can treat you like a doormat and you should just say yes (and drag your spouse into it because you have kids/the other person is "sick"/you don't want to fight it.

Divorce is brutal. Everyone and everything changes. The individuals have to figure out how to adult on their own and parent together but separately. Your wife and her ex have done none of the work to separate themselves except to not sleep together. You're filling the void left by the ex, and he's continuing with his other husbandly duties that don't disgust her. He only does it because he gets a benefit out of it, and he has a booty call that he lives with when he needs to. Neither of them were ready to take on the added responsibility of a partner, and now their partners are only there to support the dysfunctional parts of their relationship so they can cobble together the family they ACTUALLY wanted.