Insecurity abounds. You allow each other to look at your phones if you think something suspicious is going on? Wow what a way to live. My hubby and I have never had that type of conversation because we trust one another outright. Neither of us hide our phones or worry about what might be in them but they're certainly there to go through if either of us ever has the urge... So far, the urge has never arisen.
What would be of some concern to me is if I asked him to stop interacting so much with someone and he made excuses not to and turned it around on me as "over reacting" That would be a red flag to me that I'd want rectified or compromised on.
Why don't you ask her why she is so mean. When she asks you what you mean, tell her she leads this man on, gives him hope when she continues to contact him and, by keeping contact she is not giving him a chance to heal and move on... to me, that's very cruel. See what she says. Rather than ask her to stop, make her realize why she should and maybe she'll voluntarily stop.
Besides, if it was such a "bad relationship" why would she want to be friends with someone that treated her badly?
“The willingness to accept responsibility for one’s own life is the source from which self-respect springs.” ~Joan Didion