Did she say she's not going to come over anymore? 

What does your husband think about her room turning into a guest room?

Maybe you should give it some more time before your repurpose her room because it would come across as you kicking her out.

At least not once they age out from under the CO which usually is at 18 or HS graduation whichever is the later.  If you can invoke forced emancipation on a younger minor, you may not have to house them even until they are 18.

So, start staging that room for the remodel.  Rip out the carpet, remove the furniture, put in a collapsable bed frame for hte matress. Buy a molded plastic yard table and a single molded plastic yard chair and a bare bulb lamp on the table. She can put her duffle bag on the floor. The moment SD ages out from under the CO, make it the guest room.

To minimize risk of her trashing it if she visits, go with durable flooring, washable paint, and stone topped furniture.  Do a full video audit of the condition of the room before she arrives to visit and after she leaves then send her a bill for any damage she causes.

If she knows she is under the hairy eyeball and will have her ass bared for her crap she likely will avoid visiting.

Daddy needs to see the video of what his noxious failed family progeny perpetrates.

Lather, rinse, repeat.

Good luck.

If your husband babies her, acts like her friend more than acting like her father, and tells you you're crazy, it is unlikely he wil be onboard with you doing anything with her room. Unfortunately, he is the primary problem, especially in having let this behavior go on for 10 years+. You might have to go the subversive manipulative route with this one--make her 18+ visits uncomfortable and put mice in her room. lol. 

Unfortunately there is probably a disconnect between what you want and what will happen.

Based on your description.. I see zero chance your SO will allow you to cut SD off from your home and take over her room.

What I would suggest is that you need to communicate with your partner... you can't have all these secret plans and dreams.. you will be sorely mistaken if you think you can do what you want without their buy in.

So.. ask him about it.. what are the plans.. what does he think about redoing the room.. 

Whether you are legally obligated to have to provide her a room is a different question to whether your Partner will want to provide her with a room.  if he wants to keep her room for her.. then you are probably fighting a losing battle.. and you can consider if your relationship with him is worth the compromise.

part that concerns me:

"She acts and dresses sexually around him"

This isn't normal. What is your DH's reaction to this behavior? How does he respond? 

With what you describe, both are possible if not likely.

Time for a burning platform to get this noxious failed family semen demon to launch.

We did not have much trouble with my SS-32.  However, his mom and I agreed from day one (we met when he was 15mos old and married the week before he turned 2yo) that our goal was to raise him to be a viable adult.

Various influences, primarily the manipulating PASing SpermClan, motivated him not to take the full meal deal mom and dad (me) university scholarship.  SpermLand ends CS at 18yo or HS graduation whichever is the later. Unless the kid is a full time student in good standing with a higher education institution.  In that case the SKid can petition for CS to continue until age 21 with CS going directly to the no longer minor child HS graduate rather than to the CP.

The SpermClan guilted SS so hard about how that would be taking food out of the mouths of his three also out of wedlock Spermidiot spawned half sibs by two other baby mamas that he decided to forego university.

So, burning platform time since being live in a sofa rodeo rider keeping our sofa stationary was not acceptable to his mom and I.

We made him our live in beck and call chore boy.  He had a very long and ever growing daily chore list 5 days a week. If he completed it before we got home from work, he got to do it again the next day with that days list of chores.  If not, he was on the curb when we left for work. No access to the house until we got home.  

He only tested us twice on that. Both times he was on the curb. Once when it was hot. No water, no food. He had to figure his day out for himself. The second time it was chilly. We had him grab the comforter off his bad. No food, no heat.  

After that he made sure to have the chores done and done well.  After 4mos of that he enlisted in the military on teh delayed entry program.  He remained our beck and call chore boy until he reported for Basic.

If we went out to dinner or on vacation, he went with us. But when we got home, he was cleaning, dusting, mopping, scrubbing, dusting, vacuuming, washing, folding, weeding, trimming, painting, slicing, dicing, chopping, cutting cooking, serving, and cleaning it all up after we ate.  We worked that kid's ass off.

He has completed 14yrs of service and has less than 6 years until he can fully retire with a lifetime pension and medical benefits.  He has completed an AS degree in Computer Science and is slooooooowly working through the classes to complete his BS.

Upon occasion when we are bantering he brings up his time as our live in beck and call chore boy. The three of us tease each other about it. Then ultimately he thanks us for not letting him be a slug.

He asked me to adopt him when he was 22. We made that happen.

The Spermidiot is an infantile serial statutory rapist gang banger wannabe who still cruises Malls to try to pick up teens.  Spermidiot spawn #2 is on the dole. #3 is in prison serving a long sentence for a felony, and #4 is not far behind the inmate.

Light the platform and start tossing gasoline on it regularly.  Escalating abject misery will get her to leave. If incest kid worshiping incest daddy follows his mini wife, then you can get on with living your best life unencumbered by his baggage.

Hopefully he mans up.

Good luck.