No, I don't think YABU. At 7 my DSs knew only that babies grew in mummies' tummies. I'd have been worried too. How does your DS's friend know that "It sounds like a lady having sex." That's what I'd want to know.
My younger DS was very upset by another boy showing him extreme porn online. He was older than your DS, 11, but it really freaked him out. Luckily he told me while we were sharing a room on holiday and we had a long, long talk in the dark which resolved the issue. Darkness is helpful when someone wants to talk about embarrassing things.
As you say, your DS didn't understand what his friend said, and I would ignore it, as you did.
But that doesn't answer the question: How would a 7yo know what a lady having sex sounds like? Sounds as if he's either been exposed to something in rl or, in my view more likely, an older child has shown him stuff online.
I'm very bad at confronting people about sensitive stuff, especially other parents. But if I were the sort of person who had the courage I'd go and speak to his mum. Tell her what he said. Her response will tell you a lot. If she's as bothered as you are, she may be able to identify the older child and, more importantly, talk to her DS to find out what he's seen and what he made of it.