Bluebelle and others.....I reread some of the posts again, and agree there are a few avenues to explore before resorting to Social Services or outside professional help.
Here's my update: To begin with, I called DD2 last night and apologized for upsetting her, explaining that as a mom/grandma, I was being protective and that my only long distance recourse is to shoot off my big mouth. Long story short, it's all good between us again, but the issue at hand does linger, especially the inappropriate touching, which bothers me the most and which hasn't really been resolved (yet).
DD2 told me that after she hung up on me, she sat DGS down to ask him questions. She too suspects that DGS may have seen some adult material on line even though they have very strict parental controls in place. It now appears that DGS knows his way around computers and is quite adept.
Yesterday, he admitted he could disable the PCs at will and restore them again if he wanted to. He then 'pinky swore up and down' that he had never done it, but DD2 isn't convinced that she should believe him.
DD2 reiterated also that he does get extra help at school for his ADHD, and I'm guessing (as some of you pointed out) that the school would have picked up on the more serious issue if there was one.
Re: DGD's dance moves.... DGD did watch one or two dance videos where the women were 'twerking' and that's where the moves are coming from (I had never heard of that). DGD has now been warned that twerking is not 'ladylike' and that mommy and daddy prefer she use her prettier moves instead (she knows which ones they are).