I think parenting the children is an important aspect here but it's more than that. BPD is on a spectrum and some pwBPD are more functional than others, but Max's wife, like my mother, is very impacted by it.
The kids need parenting now, but eventually will grow up and be independent adults. For Max's wife- her current functioning ability and her emotional age at age 50 is how she is going to be. People can learn skills at any age but her level of mental health also impacts this. I think it's fair to say her ability to manage on her own is very limited. That her mental health issues were significant enough to be qualified for SSI also suggests this.
Max's dilemma is probably similar to my father's- which is balancing ones own well being with the limit of what one can manage ethically- letting a person who can not function on their own fend for themselves. Another complication is that, even with this level of disorder, they retain the status of legally competent and so we have little control over their actions.
To me there are two choices, divorce or damage control. At the moment, divorce is not a consideration, so the default is damage control, what is possible. While we don't know what options Max has, some sugggestions have been to consult an attorney for information about the divorce and custody questions, so the information is known if it ever comes to that. Keep some funds in a separate bank account. It would still be counted as marital property but it would protect them from your wife's spending, and ways to keep your own peace and protect the children.
I think seeing the wife's wanting to have a GF was a form of gaining peace as if she was focused on someone else, it would be a reprieve in the drama. However, it also showed you what doesn't work. She was unable to maintain an apartment or a relationship. An apartment is an extra expense. Also you know that the latest "focus" on what she wants isn't a solution to her issues, even if she thinks it is at the moment. While you can't stop her from these wantings- you also don't have to assist by signing a lease, moving her, or funding something unreasonable.
As to the 12 step groups, which I have been in as well for family issues- they can help family members of pwBPD deal with the dysfunction but they are not a treatment for BPD itself. When alcohol and substances are a factor with BPD, they are often a form of self medication. For someone to actually "work the steps" they need to be open to a sponsor and the group turning the mirror on them, for the person to be accountable for their behavior. Your wife can certainly attend, the groups are open to anyone- and she may get something out of the group experience- so don't discourage her if she wants to go- and as you said it's an outlet, but I would be (keep that to yourself) skeptical about chances of improvement. In actuality, a 12 step CODA group may be more helpful to you than to her.


