I have NO idea if your BF was inappropriate sexually with his stepdaughter or not, BUT. You have the responsibility to protect your children from the chaos and very real dangers associated with having an active addict around.
I hope for everyone's sake that he stays clean and in active recovery. It's a process, be vigilant for your own well being and that of the children. If he begins to drink or use distance yourself.
The sexual aspects are not a call anyone can make. Recovery is an unpredictable journey, some get more affectionate/sexual, others of us less. Many times people around us, and even ourselves, have assumptions about how recovery is going to affect a relationship etc, and many of us are surprised.