If you really want to work on your marriage, I think you ought to be talking about this with your wife rather than with the object of your infatuation. You also should probably both get into couples' counseling to sort out what's missing from your marriage. How much time do you spend around the sister-in-law on a regular basis? Are there ways that you can decrease your exposure, and thus the intensity of your reaction to her? "In love" feelings are truly more chemical than anything else, especially at the beginning of infatuation... and yes, they can be conquered, if you diminish the exposure to the trigger of that chemical reaction. But you have to be committed to that self-discipline, and committed to your wife and the marriage, and going to counseling, in order to accomplish all that. You can do it.
But you have to decide what is ultimately more important to you. If you end up with the sister, your (ex-)wife is not simply going to vanish off the face of the earth. You'll have to deal with that fallout for the rest of your (and the sister's) life.