Inappropriate Behavior...? Need some help

Hello - I am new here, but found this site looking for some answers to a situation I found myself (rather, my son of 8 years) a few days ago.

His older cousing (12 yrs) and he were spending time playing video games in his room most of the day.  Later in the day, we were getting ready to eat dinner and my son blurted out that they had been playing a "massage" game.  The older child quickly called him a liar, and a small fight resulted and I decided to let it drop and talk with my son in private later.

After talking with my son, he said that the older boy told him to not tell what they had done, as he would get in trouble from his dad.  My boy said the idea was all from the older boy, and he seemed quite naive to the whole thing.  He assured me that nobody did any touching in the areas covered by underwear (we've taught him that for years) but the idea that this has happened leave me really wanting some answers.

Was this a discovery session that could be followed-up with something else later?
Am I overreacting?  Should something be said to the other parent?

Right now, I am not going to allow any alone time of my kids with this child...  Probably not for a long time.  Knowing he told my son not to tell gives me evidence the child knew his actions were not acceptable and were wrong.

Any thoughts are advice  - greatly appreciated.

Thanks in advance-

--SH

[margypops]

It may not be a good idea to let children have access to the PC or Video Games in a seperate room but somewhere they can be observed,put whatever it is they play on in the living area and check them regularly,you probably want to tell the boys Mom what has been going on and not let him be alone with them at all.Can they not play ball games outside or things other than spend "most of the Day playing video games"Some physical activitys may be a good thing Turn it Off and let them have it on  a short while in the evening.!!

[jjhodge]

I appreciate the fact that someone responded but really the issue I had a question about was the behavior, as my kids spend 90% of their time outside on any given normal day.  On this particular day we had a family medical emergency that led me to juggle work and having an extra kid in the house for a bit.

Anyone have some input on the behavior and whether this is normal or not?  I would hate to start a firestorm within the family over something that is considered fairly normal.  On the flip side, I'd rather not fire things up over it if not needed.  

I can handle keeping them apart...  I plan to do that anyway.  What I would hate to see is that this kid switch his sights to another child and have it go too far.  Just not sure what the behavioral tendencies are.

Thanks in advance for any insight into this topic.