I just want to say, the posters above covered it. None of it is okay. But I seriously am a bit angry at your DH: "maybe it's what you wore" Like excuse me??? How does you wearing ANYTHING have to do with the fact that SS decided to be inappropriate? I don't care if all you wore was underwear to bed (probably not the best idea with kids in the house...) but that still gives SS absolutely ZERO excuse to be laying ANY hands on you, period.

Ditto to what everyone else said.  Also, have you considered counseling for SS? Although it's normal to start exploring sexuality at this age, the boldness of what you're describing sounds far beyond what is normal.  I don't mean to make assumptions, but in my line of work, this would likely be sent to CPS for a welfare check.  Is there a possibility that SS has been victimized himself?

The others have all said it perfectly. You have to protect yourself. This is not normal behavior and SS is only going to get bigger. He needs counseling ASAP as well as a true confrontation. If you and BM are on good terms (if she is telling you about the porn, I would think she is concerned too) see if she would be willing to do this intervention with you. 

I just want to chime in with agreement to what the others said. I definitely think you and husband should address it, and making him go to a therapist as well. I'd be concerned if it was just you and your husband dealing with it in-house may just make him sneakier about it, rather than fixing the problem. Its so sad how much porn young kids have such easy access to because I feel like it de-sensitizes them and gives such unrealistic expectation for kids so young, but I don't know really how you can fix that beyond the usual restricting access and monitoring stuff. I imagine its near impossible to completely eliminate it. Also I just want to say that I'd be concerned for his sister as well. Good luck. That sucks to have to deal with.