Urgh. Sorry you've found yourself in this situation OP and you are definitely NBU.
I hope for your and his DD's sake that he is completely detached from his own family when looking at this stuff, but it won't necessarily be the case.
Slightly different situation, as we never had an ok relationship and he's a horrible dad and husband either way, but I found out that my father was searching for this sort of porn (with BDSM elements) when I was a teenager. The initial disgust/horror wore off after a few years and so I can stand to be around him for short periods now when necessary, but I've never felt anything positive about him since.
Probably didn't help that I suspected he'd involved me with his fantasies (think cornering me while wearing few clothes and threatening to 'spank' me). And asking if I'd 'get my tits out for the lads' (him and my then 11yo DB) when I was 9 and had breast buds.
He spent much of his retirement meeting up with people for sex while my Mum killed herself working. Anyway...
There was a lovely Christmas argument story he used to tell when I was a kid, about his stepdaughter (my much older stepsister). He claimed with many flourishes that she had propositioned him for sex while visiting us one Christmas (and he told this story to his young children and wife).
We thought it was just another fucked up story, but my DB found texts to poor SS last year, where 'D'F was going on about how he'd loved her since a baby and how much he wanted to have sex with her minutes apart. Her sending unenthusiastic but unsurprised replies. Gods knows what went on when she was a kid.
Don't brush it under the carpet because it is easier, and good luck. Apologies for typos, am hastily writing on my phone.