I have mixed feelings about this.
As Smoothy said, there are no specific reasons to consider the 7 year old is being sexually abused, other than a sick feeling the mom has, and the way she sees him look at her daughter.
Judy's spidey sense is tingling.
I'm thinking that there is far more to the story than we know to make an educated guess as to what's going on.
Too many gaps.
I hope the mom responds to the posts, and provides a little bit more information.