Personally I wouldn't have told her....never was much for kiss and tell.....especially knowing that the 2 of them were/are best friends and now she probably tells.....????
Never been in your situation but I definitely know I wouldn't put myself in any position to get in some sort of sexual harrassment suit.....too many eggs in one basket sleeping with coworkers, IMHO....
What you're describing seems vaguely like some of the scenes in the Michael Douglas/Demi Moore flick.....can't remember the name of it offhand....glad I didn't go through what Mike did.....
Good luck whatever you choose to do.....