P.G.
He's young, and something very wrong happened to him or in front of him and he needs counseling ASAP. If all the adults can pull together as co-parents and support him with counseling, that would be great. He needs to know that what he did was wrong, but he also needs to be helped if something happened TO him.
Your daughter did a GREAT job. If this is the only incident, and nothing more happened, she may only remember it as the gross/wierd thing. If you can keep your freak-out reaction (which is NORMAL) to a minimum, she will take the cue from you. You believed her, you acted on it, you're taking care of it. THAT IS HUGE (I know, as I didn't have this kind of support).
They can never be alone together. You can still do family things, and probably should, as he needs stability and support to get through what happened to him. But they can't be alone together because he's not safe. If she asks, just simple "X is having some problems, and we're helping him, but we need to do this to take care of it." should be enough for her.
Feel free to instant message me if you like.