It sounds like a good question for her doctor. You are right that it could be LBD. One of the common first symptoms is hallucinations, though I don't know if they are sexually explicit ones. Another possibility might be a urinary tract infection. This can cause very strange things, including hallucinations and delusions. It sounds like a complete medical evaluation would help a lot. Let us know what the doctor says.
Because something odd is going on in her brain, poor dear. Start with her primary care doctor. If she hasn't seen a doctor in years and needs a new one, find a doctor who specializes in older adults -- a geriatrician.
Dementia is a possibility, but it may be something more readily treatable. Don't delay!
Dementia is a possibility, but it may be something more readily treatable. Don't delay!