Well honestly, this is not going to suddenly change, just because she is in her 40's. I hear (but don't know yet because I am only in my mid 40's) that with menopause her libido may take a sudden jump. You could of course hope for that.
Other then that I think I should tell you that she more then likely avoids the hugs and kisses because she has the feeling that this may lead to sex, since you would take it as a sign of her being ready for some intimacy. So she probably would rather avoid the whole thing all together, even if all you really want is just a hug.
Also, just because her libido is low, does not mean she could not be convinced. You (unfortunately for you) would have to just be more convincing. A back and neck massage that leads slowly into something else can always convince me. Also, try just stroking the insides of her arms gently. You won't believe how much that stimulates our senses. Try doing that when you are not anywhere near your bedroom.
I do wish you good luck, and I really do feel for you. Unfortunately, if your wife is anything like me, she really feels terrible about that whole situation and she wishes she could change how she feels, but she can't. Just keep trying, don't give up. And love her anyway for the person that she is!