Most Helpful Guy
I would break up with her, she knew what his intentions were and still hung out with him/entertained him.1
Most Helpful Girl
Break up with her clearly. No one deserves to be cheated on... except one specific scenario in my opinion.
She sounds like she used the guy. And just because you two were fighting doesn't mean that she can find comfort in someone else giving her what she wants. How would she feel if you did the same? Not good, I bet. And what would happen if you two fight again? She might sleep with someone this time.
Dump her. She's not trustworthy.2