Has anyone in your family considered speaking with his pediatrician, or a family doctor about this? Your step grandson might need counseling or therapy; you may want to ask his doctor for a referral in regard to a teen therapist or counselor in your area.
Your step-grandson's interests are probably not that unusual considering his developmental age coupled with the sexual information found on the Internet. The problems arise if he acts out what he fantasizes. Since he lives with you, what sort of discipline do you provide for him beyond taking away his phone? He needs to know the consequences of disobeying your rules.
I should not be surprised by anything any more, especially since the Internet is largely paid for by porn, but Grannyf__me websites are a new one on me.
Poor kid, he seems like he has no idea that there are (and should be) boundaries, not only in our actions but in our minds. Was he raised in sort of a lassiez-faire manner with nobody laying out strong moral messages about right and wrong? Was he sexually abused when he was younger, or just sexually exposed in an inappropriate manner?
Someone needs to have a serious talk with him about societal boundaries and what is generally considered wrong by most everyone. This kid is getting into things that infringe on other people. It is one thing to have a peculiar fantasy life, but it is another to act out when the other people around him are just trying to have normal lives. Some people do have weird sexual fantasies and probably even weird sexual lives, but they have learned to control themselves such that others around them (except willing partners who are also into weirdness) would never even know. If he can't grow out of this, he is going to have to grow self-control. But since he is so young, it is possible he will be able to grow out of it. This would be especially true if his acting out is because of a sexual trauma in his past. If he were to get some good counseling, he might be able to process things, so he is not doomed to be stuck in them forever.
Can you get him some therapy? Because just the family talking to him is not working, obviously. And are there any (decent) male relatives with whom he can live, so you don't have to be uncomfortable that he is secretly fantasizing about you?
Sometimes children who have been exposed to sexual experiences they arent mature enough to understand; will attempt to make sense of it the best they can. Unfortunately, the forms in which they often tend to Express these behaviors can present itself as acting out in inappropriate behaviors, that can be just as confusing to us as adults as to why their child would do such a thing. One thing I truly believe is that most of the time, these inappropriate behaviors are learned behaviors. Maybe from a friend, another older child or even another adult. I would ask your grandson where he learned about these websites or what he was thinking or feeling when he decided to touch you inappropriately. I would make sure there isn't something he needs to tell you. Maybe this is a cry for help. Most child sexual abuse, is committed by someone the child knows or has easy access to the child. Either way, get your grandson someone he can talk to openly like a therapist, so he can make sense of his own actions and God forbid doesn't act on them
You should get him to a therapist immediately