I'm guessing the dynamic is that he gets a lot of approval for telling lies - or at least stretching the truth - about you to his biological mom. Kids are incredibly adept at understanding what adults want them to say, and they do it for approval.
This little one has been abandoned by his mother - which is about the hardest thing for a child to endure. Abandonment by fathers is tough too, but when mom leaves it cuts all the way to the core.
And now she's coming back and he wants to please her.
When you describe a child's behavior it's important to look for when they aren't misbehaving - and catch them in that moment and praise them. No child misbehaves all the time, so he isn't "lying" 24/7. Sometimes he's asking for a soda and sometimes he's telling you he's out of socks.
I know this is hard, but it's hard on him too -
MommaDD, Does your husband know the little boy is a pathological liar? I agree with the other person that commented, commend and reward when hes truthful and when hes not,there needs to be consequences..I know his behavior can affect your relationship with the little fellow, but remember your stepson is a sensitive subject, they will choose their children everytime,trust me ..So whenever you speak of him,be positive for your marriage sakes..When hes caught red handed in a lie,address it..Hope everything works out for you...