yup we are living together and we have a bank account under both of our name.
Once again, I support the advise given by The Real Canadian (TRC), leave and file via the consular to avoid problems. However, it seems as if you have decided to dismiss this option, because somehow it is not granduer, or in line with your ideals. First of all, based on the excellent link by TRC, you will need to explain when your
intent changed to now want to become a non-immigrant. You have two issues, you tried to acquire another form of form of visa, denied by USCIS and secondly, somehow you fell in love and into marriage and now want to get a green card...? All of these things happened between Oct 2009 to date? You can consult with an immigration lawyer, but I can assure of one thing: he/she is going to assure you that they can help you navigate with the green card process. I don't know any lawyer who would tell you NO, go back to India and do consular processing, they need business and would certain indicate they can help you, if this becomes difficult with USCIS and are forced out of the country, it will be more money to get waivers and other junk to be back in the US.
In my view, do whatever will make you happy and give you the most sense as a course of action. What I can assure of you is this, it won't be pretty and you have a potential to be nailed on the wall by USCIS. You have to be concerned about the issue of intent, possible misleading of US Consulate about your true intentions of visiting the US. It is reasonable to conclude that you used the tourist visa to immigrate to the US, which won't be viewed as NOT funny.... You don't have any strong evidence to prove co-habitation and convince USCIS of a bona fide marriage, you should look at the AOS Experience in this forum and the information submitted by people approved by USCIS. Additionally, if you are picked up by ICE, it won't be pretty, you will automatically incur a bar in the US for about 3 years, below 180 days or above 180 years, 10 years. Getting a waiver will cost you money as well. In the end, just do what will please you dude, including filing and getting slammed by USCIS or approved, whatever makes the most sense but not necessarily wise.