I know I'm in the minority, but I wouldn't tell her... not yet. Give him ONE mistake. Make it clear to him you are only giving him one. If it happens again save the evidence, tell her, you don't have to say it's the second time.
One of these scenarios is what will happen if you tell her:
1) She will take his side and you lose her as a friend. She may know about him already, and is ignoring it for whatever reason, maybe can't face up to it yet. Or she will refuse to believe what you tell her, and be mad at you for saying what you did.
2) She will blame you, partially or entirely, because she's seen you "flirt with him" (or whatever). You have no proof of what he did. It is your word against his... her husband's word against her friend's.
3) She will believe you and not be friends with you any more because of embarassment, or because you are competition.
4) She will believe you and blame you anyway.
5) She will be horrified, break up with her husband, and put you partially to blame for the end of her marriage.
Remember about "killing the messenger" of bad news? Telling her will ruin your friendship in the short or long run. If he's fooling around, she will find out soon enough, and THEN you can be there for her as a friend. If she already knows about him, she doesn't want to hear he is attracted to you. If she has no clue about him, she will want to believe him, not you. You will be the bad guy.
Please don't throw away your friendship because of a stupid mistake of a stupid guy. I have been there, done that, told and not told; telling NEVER ends up well.