Actually, I think you're looking at this from the wrong perspective. It's not about M and her husband--it's about you and your (awesome-sounding) wife.
You say your wife is supportive of you continuing a friendship with M. But would she be okay with you resuming a relationship with M if her marriage ended?
Many people do arrive at poly from cheating. It sounds like you have done a good job of starting over with honesty. It sounds like your wife has done a wonderful job of learning about poly and forgiving you.
But is it be fair to ask your wife to let you continue seeing M? You have the chance, now, to start over with dating people whom you can be honest about from the get-go.
M is continuing to be dishonest with her husband. She won't make the hard choice to leave him, but nor will she commit to having a truly monogamous marriage with him either.
I think M's issues are her own to deal with. I think you should move forward with your now-poly-friendly wife as your first priority.
Single, straight, female, solo, non-monogamous.