My friend is trying to get me into a...

I know him since we were in high school, we are good friends. We supported each other through good and bad times.
Also, his wife is a good friend of mine, they are together for a long period of time.
One night, we had a couple of drinks, and she has brought up this subject. I was kind of freaked out, to be honest.
She is a good-looking woman, but I have never had inappropriate thoughts about her because she is my best friend's wife, obviously.
I declined their invitation, but I can't stop thinking about it.
How can I still be friend with them after this?
Since that night, I have met them twice, and they behaved normally as if nothing had ever happened.
I am not feeling comfortable knowing that my friend wants to watch me fucking his wife.

Am I overreacting?

Well,is up to how comfortable you are with them

Hi from limassol cyprus,welcome anytime.ebal

Good question when do you no the bounderies