I and my children are UK citizens, my wife is S.Korean and had ILR in UK. I have been on international contract for last 4.5 years in China with my family. During that time my family have returned to UK for visits, approx 3 weeks, approx every 12 to 18 months. Has my wife lost ILR? If so, should she apply for Returning Resident Visa before we leave china or can we sort it out when we get to UK? Surely she would not be denied entry?
According to the rules, she has lost ILR. The issue is whether she was classed as a visitor or a returning resident on each of her returns. You can probably look in her passport and see how it was stamped. It is very likely she was classed as a visitor and in that moment, she lost her ILR. This is especially more likely now as the UK started conducting exit checks last year and one of the key issues they are targeting is the return-briefly-to-maintain-ILR scheme.
You can try to apply for the Returning Resident visa but it is notoriously difficult to acquire. I've never actually heard of anybody getting one. Yes, she could be denied entry. The typical experience in this scenario seems to be that the spouse is allowed in as a visitor with the caveat they must leave within some short period of time to return to their home country and apply to join their family from there. Note: You cannot switch from a visitor to any other visa type in the UK.
If you are going to re-establish a residence in the UK, the 'safest' route is to get as much sorted out as possible before you attempt to return to the UK and apply for (and get) a spouse visa. I think the biggest concern you then face is whether that application can be made from South Korea. I believe the answer is yes, but you may have to contact the local consulate to verify that. In any case, do whatever you can to get that visa in hand (or verify that the ILR is still valid) before you attempt to return.
edit: Here is a link to the official government site of returning residents.