Short version:
Chloe never had any interaction with David (the husband), all of her stories about their liaisons were made up.  Catherine ended up cheating on her husband but he never cheated on her.  Chloe dies in the end.

Longer version: 
Catherine hires a young call girl (Chloe) to tempt her husband (David), whom she suspects of cheating on her with his students.  Chloe reports back to Catherine with stories of her flirtation and, later, sexual encounters with David.  Catherine is upset but also turned on by these stories, and ultimately sleeps with Chloe.  Chloe falls in love with Catherine and becomes fixated on her as a lover and mother figure.  When Catherine ends the relationship, Chloe is devastated and decides to still have a connection with Catherine by seducing her son.  Catherine confronts her husband about his affair with Chloe, but he denies the affair, and Catherine suddenly realizes that he is innocent and Chloe made it all up -- that she has cheated on her husband, but he never cheated on her.  Catherine comes clean with David about the whole affair, and they reconcile.  She thinks all will be well, but when she returns home she finds Chloe and her son in bed together.  A confrontation ensues which ends with Chloe falling out a window to her death.  At the end of the movie Catherine and David have apparently become closer, and the family seems to have moved on from the incident.  The last shot is Catherine wearing a hairpin that Chloe gave her; she apparently wears the hairpin as a reminder, but it's left to the viewer to decide why.

Thanks Laura!