am i over reacting about my 7 year olds sexual behaviour?

first of all im going to explain to you about my son first!
he is 7 (june) he was just curently diagnosed with o.c.d,turettes,a.d.h.d.
he has been out of control for the last 2 years! he goes to a ''special'' school that can take care of his needs! he has been kicked out of j.k and his old school! we have done EVERYTHING for our little guy,to get him the propper care.We have done everything possible for him!  he has always had some ''sexual'' behaviours (talking about sex) not knowing what it is though!
We have just recently put him in a hospital that is for children like my little man! he was there for 8 weeks (home on weekends)....that's where they have came up with his diagnosis! they gave him propper evaluation! never once even noticed any sexual behaviours! with all this being said i will get to the point!! my son was in the backyard talking to our neabours son through the fence (5) he was out there for maybe 10 minutes! he came inside like it was no big deal and said ''boy'' licked my penise and i liked it! aprently they were puting there penis's through the fence and doing ''penis rounds'' thats what they called it! of course i lost my mind i got very upset and cried!! just because of all this stuff that we are going through with him now this!! i talked with the mom and we both agreed that we are not going to let them talk through the fence unsupervised! like WOW i feel so discusted to be honest! and the sad thing is,is that my son said he liked it,and it didnt seem to bother him at all!! he even said i think we should try and make this leagal!!
he also said he want's to try and make this ''legal'' just the way he was talking about it REALLY REALLY REALLY botherd me! i jsut want to know if im overreacting or if this is normal?? i think i might already no the answer just want some opinions before i call the doctor!

[Gina04]

I don't think you are overreacting at all.  This is something that needs to be dealt with as soon as possible.