It will be processed through Singapore, with a listed waiting time of 18 months. Are we seriously expected to separate for almost two years?
Yes.
However, if you submit a very good application the processing time can be much shorter, especially if they decide no interview is required. You make a very good app by including a lot of proof that your marriage is genuine, which should be easy for you since you've been married 10 years and have a child. In your case, probably an interview will be waived.
I'm told she can apply for a tourist visa while her PR is in process, ...
It is very unlikely she will get a tourist visa - to get one, she will have to prove she will leave Canada at the end of the visa, by showing ties to Thailand. Since her husband and the father of her child are in Canada, pretty well nothing will convince the visa officer that she will leave Canada when the visa expires.
but what about working here? Can she apply for an open work permit? How long would it take? Should she apply in Thailand or in Canada?
Applying as a spouse will probably be faster than applying for a FSW visa. She's unlikely to get an open work permit, but you could try looking for a job for her with a company that would be prepared to get a labour market opinion for her and hire her - difficult.
I think it would be best to just apply as soon as possible for a spousal PR.