My wife is a major hoarder and I need suggestions on how to proceed

[Skittles]

8. it is very hard on children not to be able to have friends over

I know from firsthand experience, although in my case it wasn't due to hoarding. I kind of felt like I had to protect people from my parents, they were a bit off the charts. That kind of upbringing stays with you, although to be honest it has served me well during the pandemic.....it is so much easier for me to be alone that it is for others.

If you came from an abusive family it is very likely you did the best you could so I hope you are not too hard on yourself. But it's not too late to make some changes. One thing that may help is for you to get together as a family (although initially without your wife)
to decide what to do. Listen to what the mental health daughter has to say. Get some suggestions. Let your kids talk about how her hoarding has affected them, too.