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How everyone responds is very important too. If it is a mental condition that can be modified with (mild) drugs, so be it. If not, and it truly is just "dirty old man syndrome" then family counselor is the best way to handle it. Personally I would have many problems if it were my daughter being verbally assaulted by anyone, as I am sure you do.
Keep going to counseling and see if it improves.
Your daughter is right to avoid him, whether it's dementia or not. If it is dementia, then perhaps she'll be more understanding and it will stop as his condition changes. If it's NOT dementia, then perhaps he does this because he WANTS to keep her away. I don't know how long you've been married, but is any man worth risking the relationship you have with your kids?
Or does he just say inappropriate things to your daughter because he's a dirty old man? If that's the case then your daughter is behaving correctly to avoid him. You'll have to make other arrangements to see her when he is not around. Don't expect him to stop the behavior because he won't.