I haven't read all of the replies; but here's the deal. If you can establish that there is truth to this, then fuck them both. Neither are your friend.
You are comfortable with him, you've known him for 12 years, et. al. But he is not your friend. How people act at their weakest moment, not when things are good, is the true measure of character. (If it's true) He's lying to you, betraying you, probably talking shit about you behind your back with her since she's giving him a piece -- you can bet that for sure he's not defending you if she says something shitty...
Like somebody said earlier, he is a piece of shit (if true) and he (and she) should be ex-communicated. Never another word. Nothing. Fuck him.
Not fair, but neither is life. Move on. You can find friends and girlfriends that have the capacity to treat you the way you deserve to be treated. Look at this as an opportunity.
P.S. To catch him, just call him, or confront him and say "Girl's name" told me everything -- how could you as my friend be fucking her? And while I was going out with her?" See if he spills. Don't approach him in a threatening manner (hard, I know) but rather in a non-confrontational, you are my best-friend, we can work this out, but I need to know the truth manner. As soon as he admits to it. Boom, you're out. If he won't admit to it, IMMEDIATELY (before he has time to call her) call her and try the same routine. Because she's not attached to you anymore, she may tell you. (However, her word is suspect to say the least). The best bet is to get him to admit it. But, on the other hand, if its coming from two friends that you trust implicitly, then it's very likely true. Have they actually seen it, or are they just drawing conclusions?
Either way. Keep your head up.
And if you find out it is true, seriously, get them both out of your life -- they are not good for you.