I started this post out trying to be gentle and kind, but my feelings of wanting to protect an innocent and vulnerable little girl took over. Please know that my concern is first and foremost, for her.
I too urge you to make the choice to protect your own child. 5-year-olds DO NOT touch another child's private area because they are curious. And he has not displayed behaviors only once. The stepson needs to have his abuse investigated, and needs therapy. I know you tried, but please try again.
You can do something with your child. How will you be able to live with yourself, knowing that something serious may happen, that will affect your daughter profoundly - and how will you feel that she will oneday know that you took care of yourself over taking care of her?
You said twice in the original post, that you just want this man to leave. Yet when he asked if you wanted him to leave - make the call - you chicken out. Please don't let fear rule your life! We're ALL afraid. It's not a reason to not take action.
Put a plan together, do not let your daughter be with anyone that you don't COMPLETELY trust, and get your head out of your a**.