Why hasn't CPS done anything?
Are you able to take your grandson in and look after him, even if it is just over the weekends and during school holidays?
Speak with his mother too, no doubt she will not want to listen, but it is still worth a try. She will no doubt carry on with men regardless, but do stress to her that it is not right that your grandson is exposed to this and that if she chooses to do that, then she should do this when her son is not around.
It is not a good environment for a child when the mother is hitting him and calling him names. Have you asked her why she is doing this and told her that it is wrong.
You do not say how old the grandson is. Is he old enough to make his own decision to leave his mother and perhaps live with you where he will be loved and cared for! If he is a young child, perhaps you could speak with the mother so that arrangements can be made for you to look after him after school for a few hours and at the weekends, or apply to the court to gain parental control.
As you have involved all the other authorities, you could get in touch with them again to see if anything has been done and explain your concerns. It may be that the mother has had a visit from some and has been investigated that you do not know about.
If you do still see your grandson, do tell him that him "acting out sexually" is not right. Depending on his age, it is normal for children to touch themselves, but they tend to do that secretly.
Best of luck.
You are the Grandparent, you get involved as much as you can! If you are able to take him with you anywhere you go then do so. If he's not involved with a church then get him there. I know you can teach morals and love with out the church, but sometimes bringing faith in really helps make the child feel love, and it's a wonderful place to find support and love that he might not get at home. It sounds like he is not getting a good example at home. Also is his father involved in his life? Boys sometimes need a strong male in there life to give the example.
But I was wondering how old he was too because if he's reached a certain age there is nothing to do about the sexual stuff other then start preaching safety and consequences and respecting himself.