If you’re concerned about issues like that, and it seems like you’ve got grounds to be, Id start having talks with your DS & make sure they’re never alone together. It doesn’t sound like your DH is really in your corner on this, as he defended MIL’s outburst yet thinks it’s ‘cute’ when SD nearly sits on your sons lap, so I wouldn’t count on him for anything.

Speak up if things make you uncomfortable though! Tell her to get her own seat, and point blank say ‘this makes me uncomfortable. You need to give DS space’. What’s good for the goose is good for the gander, and the precedent has already been set.

Personally, if I had a DD around my SS’s ages, I wouldn’t want her sitting on their laps & I’d both her & them it wasn’t appropriate. You don’t need to sit & wait for SS to accuse your DS of anything malicious, start setting the boundaries now.

i had 2 kids with their dad aged 2 & 3, ss has never shown any attention or affection of his own accord to my kids, sd’s abandoned their dad over a year before i met him and were absent for about 5-6 yrs and only initiated contact almost 4 years into our marriage when we already had 2 kids. Exwife is a hcgubm narcissistic pas unstable psycho, she brainwashed all her kids even ss is pas’d from hubby... i am uncomfortable with our kids being left alone with any of the skids because for starters the extent of brainwashing and motives of sd’s aren’t clear just yet but there are concerns because they spew word for word bio mums bullshit, ss is incapable of having any relationship with our kids.

even though my skids and bio’s are related as half siblings, the relationship is like a stepsibling relationship, there is no real bond and with a high conflict bio mum no one trusts her... i have lost it with hubby when we were at family weddings and engagements and all skids were there he palmed off my daughter to his daughters to watch and totally ignored them, no supervision. Lo and behold all kinds of inappropriate stuff happened like they wanted to make my kids look bad in hubbys familys eyes and they just sit there totally innocent even when they’ve crossed the line. I told hubby if i were to be at a family event with skids all there, our daughter is with hubby, not left with sd’s because they haven’t proven they can be trusted alone with her, ss can’t be left alone with my kids because they aren’t used to him and would cry, hey see him as an awkward scary stranger... 

for now so i don’t lose my sanity i stay out of any family weddings that sd’s will be at until i know hubby has addressed these crossing of boundaries.... so far sd haven’t visited our home, they keep to themselves which my dad said i’m lucky for now because it would be a nightmare when they invade your personal boundaries 

The tent thing was 2 years ago. And now SD wants to sit on DSs knee. SD needs to be encouraged to be independent and know she is loved/liked regardless. It sounds like everything is 'conditional'. Next it will be the "Do you think I am pretty?".

So tell SD the next time she gets too close to DS that she is too big to sit on other people and she needs to give DS some space. Tell her to get a chair or have a folding chair nearby. They are both getting too big to be climbing all over each other.

Encourage SD to be independent. Encourage your DS to do things with his own friends. But then they may move in the same circles and it will be good to have DS around to keep an eye on SD and vice versa. Do not doubt for a minute that your son will eventually become hormone infused and sullen and snotty. And stinky. As much as SD is annoying (which is likely learned behaviour) your son is not without potential annoyingness.

So working at BOTH of them being independent and not needing the attention of others means no one child is picked on. And respecting personal space.

I would absolutely speak up about this. 

I have an older brother and I don't recall ever, EVER being touchy feeling with him. We hugged on occasion but that's about as far as it went and we're still really close. But I mean, cuddling, sitting on his lap, and stuff? Nope. Ew. Super weird. I'm sure he cuddled me and was physically close when I was too young to remember but ever since I can remember, we had boundaries. 

Even on christmas eve when my sister and I would sleep in his room, he slept in his bed and we had a bed on the floor and neither of us desired to get close to him lol my sister and I, on the other hand, were always physically close. Not weird but we'd lay together in bed and such. 

I think you're well within your rights to say "SD, give DS some space. It's inappropriate to be on top of him." 

You are putting your son in a bad situation. Id never have my boys here with these wacko SDs I have. You can talk to your son all you want, SD is the problem. Keep your son out of the house when she is there. Stay with your family, have him stay with hos bio dad. Sounds terrible but you shouldnt have put your son in this situation.

this is an accident waiting to happen. I'm sorry, but with an attention whore SD and a accusitory BM, your son could be in for trouble. I would be petrified of SD getting him labeled a sexual offender . 

My son is almost 24, and Killjoy is 15.  Starting when they were 15 and 6, BM started coaching Killjoy to say DS was creepy and scary.  DS was completely uninterested in Killjoy, very rarely home, played sports, had his own friends and his own life, including a GF.  He knew he was in BM's crosshairs, so the minute he graduated HS, he moved out, right after DH filed for custody.  During the custody fight, BM kept it up, not realizing DS had moved out.  Killjoy was supposed to tell someone he hurt her, physically or sexually I'm not sure.  It was a Fail, because DS hadn't seen Killjoy in months.  It was a close call though, IMO.  Then BM turned her sights on me and DH for the "abuse".