This is of course not appropriate for her to behave this way being married and grinding on attached men. BUT your fight is not with her, it is with your bf. What if you didn't work at the same place and blow off steam at the same bar? He would be allowing this and you would never know until someone saw him and told you.
Respecting the relationship and boundaries are very important and he is lacking on both fronts. You told him you didn't like the way she was coming on to him and he spoke to her about it but obviously it didn't work. Let him know you don't like what is going on one bit and he needs to decide what he is going to do about it. If he chooses wrong then it is time to rethink the relationship.
I wonder how he would like it if you did some dirty dancing with a guy from your team.
By the way the line "We are just friends" is on the front page of the cheaters handbook which I am sure this woman knows by heart.
Give your bf the opportunity to fix this and if he doesn't take your concerns to heart he has shown you how important you and the relationship is to him.
I would bet this women loves drama and attention...
Many people that have been sexually traumatized or abused come to associate that kind of thing as normal for them and an expression of love. Strangely enough they feel safe in that environment.
What she needs to do is find a good therapist to help her with her past trauma that is still haunting her, not seek out someone that will simulate it.
She isn't the woman for you if you want a healthy relationship. She has a lot of baggage to unpack and you cannot help her. It is like she is trying to drive you away and make you break up with her.
I know it is easy to say just break up with her but what other options do you have? Eat your feelings while she goes and has sex with other people while you sit at home hoping for a kiss? Not much of an option is it?
This is a dealbreaker for you so please stop trying to find a way to make it work or justify what she is asking of you.