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In what tech pundits at Gartner Research call the curve of hype and gloom, Linden Lab's virtual world, Second Life, has officially entered the gloom stage.

In October, Reuters pulled its full-time Second Life reporter Eric Krangel, who had written daily news stories about the virtual world's economy for a year and a half, out of the virtual world. Krangel, who now blogs at Silicon Alley Insider, wrote that Linden Lab needs to recognize that "Second Life's reputation is now a liability," and that hanging out in the virtual world was "like watching paint dry." In November, Google (nasdaq: GOOG - news - people ) seemed to echo the bearish mood toward virtual worlds when it shut down its own online microcosm, Lively.

But Mark Kingdon, Linden Lab's new chief executive argues that Second Life has some life in it yet. In fact, Linden Lab's economic statistics from Second Life show that in-world user hours and the volume of virtual land rented by users are both growing. And the number of in-world transactions between users, typically a measure of the world's economic health, has rebounded to its record high after dipping earlier this year.

Forbes.com spoke with Kingdon, who came to Linden Labs last May from digital communications firm Organic, about his drive to make Second Life more welcoming to newbies, its questionable appeal as a business application and why Barack Obama doesn't have a Second Life avatar

LONDON, England (CNN) -- A British couple who married in a lavish Second Life wedding ceremony are to divorce after one of them had an alleged "affair" in the online world.

Second Life users can interact and form relationships with other players' avatars.

Amy Taylor, 28, said she had caught husband David Pollard, 40, having sex with an animated woman. The couple, who met in an Internet chatroom in 2003, are now separated.

"I went mad -- I was so hurt. I just couldn't believe what he'd done," Taylor told the Western Morning News. "It may have started online, but it existed entirely in the real world and it hurts just as much now it is over."

Second Life allows users to create alter egos known as "avatars" and interact with other players, forming relationships, holding down jobs and trading products and services for a virtual currency convertible into real life dollars. iReport.com: Share your stories from Second Life

Taylor said she had caught Pollard's avatar having sex with a virtual prostitute: "I looked at the computer screen and could see his character having sex with a female character. It's cheating as far as I'm concerned."

The couple's real-life wedding in 2005 was eclipsed by a fairy tale ceremony held within Second Life.

But Taylor told the Western Morning News she had subsequently hired an online private detective to track his activities: "He never did anything in real life, but I had my suspicions about what he was doing in Second Life." iReport.com: Anger in a virtual world

Pollard admitted having an online relationship with a "girl in America" but denied wrongdoing. "We weren't even having cyber sex or anything like that, we were just chatting and hanging out together," he told the Western Morning News.

Taylor is now in a new relationship with a man she met in the online roleplaying game World of Warcraft.