Should I give my sister a timeline to come clean herself so she doesn't look so much like the 'bad guy' when it comes out?
No, because you are putting the cheater in control of the situation. If your sister was alcoholic/addict, you wouldn't give them a timeline to get sober or let them keep drinking/drugging for a predefined amount of time. Having driven my own family to drug and alcohol rehab, you sometimes have to take them literally kicking and screaming for their own safety and well being.
My father is the owner of the company and will be furious at her because he has always feared infidelity from my mother (whom has been nothing but loyal to him).
If you can, you should tell both of your parents at the same time and do it now. There is no telling what this man could be doing to their business. I mean, he already crossed a very big ethical line, as a married man sleeping with another married woman. The cherry on top in this case seems to be that he works for a family business and the owner's daughter is involved, which makes it even messier. So, obviously I have no information that suggests he could be stealing from their business or doing unethical things with the business he was entrusted to manage, but my point is, this guy has pretty week morals, so would it be the shock of shocks to find out he is embezzling funds or anything else? I mean, he has to pay for his affair with funds and if his wife suspected something, he could have easily turned to using company money to fund his little love trysts.
I have no definite proof of her affair. But she did verbally confess to me because I called her out on her strange behavior. So if I tell my brother in law, he will have to say that he got the information from me.
This is where the group here could help your Betrayed BIL with how he confronts his wife. Oftentimes, the advice we give to a BS is that they are under no obligation to reveal how or what they know when they confront. You said it yourself, your BIL is being treated for his depression and needs medication just to cope with life right now after he saw some text messages. You confirming to him that he is in fact not crazy and that his wife is sleeping with someone on the side, probably one of the kindest things you could ever do for him. Like I said in my last post, don't know the nature of your relationship with your BIL, but if you cared about him at any level, he really deserves to know.
His body knows what is going on, because that is why he is having these issues. One thing to keep in mind, we have a lot of consciousness that we are unable to verbalize, because in the evolutionary timeline of humans, our ability to use language and some of the other higher brain functions that we associate with consciousness developed very recently, but our bodies are very much more aware of our surroundings and things going on in our lives, but those things manifest themselves in some of the ways you described your BIL dealing with. Again, back to the body keeping score. Informing your BIL would help his brain catch up to his body.
This would be fine, but my sister can be vengeful, and our relationship would never recover.
When you've driven your kin to rehab, as I have had to do, obviously, in that moment, you are the enemy and they will never talk to you again. In a similar way, your sister's cheating is going to forever alter the relationship you have with her. I'm a former wayward and a former betrayed spouse, what we call a madhatter around here, and I'm absolutely a believer that waywards can change and turn their lives around, because my wife and I reconciled. The first person that the wayward betrays is not their spouse, but themselves. Why do I say that? Because, at one point, there was I'm sure a lovely wedding ceremony, perhaps you were one of her bridesmaids, where your sister and BIL stood before family, friends and the world to profess their love and take wedding vows. Your sister had a stated vow of fidelity to your BIL and then she broke that vow. She betrayed herself by deviating from her stated value of fidelity. What this means is that waywards have a lot of healing that they have to do as part of their recovery from infidelity. One day, when she is ready, if your sister pulls her head out of her ass and starts fixing her shit, one of the things she will have to repair is her relationship with you and your parents.
Another unfortunate thing is my family lives in a very small town. Any word of this will spread like wildfire and greatly harm my sister's reputation. I know she is doing this to herself, but I still want to protect her from the consequences she has made for herself.
I get the desire to protect your family, she's your older sister after all, she's been there your whole life. Not you nor anyone else can shield her from the consequences of her affair. Try to keep in mind that those consequences were baked in the moment she made the conscious choice to cheat. Let's be clear, cheating isn't a mistake or something that just happens accidentally. A mistake is grabbing 1% milk when you meant to grab 2%. An affair is hundreds to thousands of small decisions that culminated with your sister and her AP having an illicit relationship. Over and over again for at least 6 months or more (based on the timeline in your original post), she has continued to choose her affair over everything else, almost like a drug addiction where the only thing that matters is the next fix. The consequences that come from this, be they divorce, loss of job, being the town laughingstock, etc. were all baked in when SHE decided to have that affair. I'm not saying that you have to like those consequences or that you should be rooting for them to happen, but you should also hold your head high and guilt free because you played no part in those consequences.
I can see that the thing you are concerned about is how this alters your relationship with your family, and that is of course a natural concern. Either your BIL or the OBS is eventually going to find out. Cheater's get complacent and sloppy. I can assure you that some point, this story is going to come out and I'm certain at some point, your BIL is going to find out that you knew. Again, back to blood family versus in-laws, you may be naturally inclined towards your sister, but how do you think your BIL is going to react to you if he finds out that in November 2023 you knew what his wife was doing and you didn't say something? I appreciate that you are in a nearly impossible situation, but if you are going to go down with the ship, I think you may as well go down on the right side of things and let the chips fall where they may.