Very chilling posts on here from OP.
He is grooming your DD.
She is responding to his behaviour and getting the message that she is more important, a better younger version of you, prettier, gets the attention etc. This isn't her fault - it is the messages she is receiving from him. She is also learning from him (and from your passive behaviour) that she is more important than YOU, that she is her step dad's No1 priority (above his wife and bio dd), and that you are weak. 
She is on her way to a very inappropriate relationship with this man.
To the poster who said she would not want him in her bed if she was being abused - I can tell you as someone who was successfully groomed that she actually would. She has been successfully groomed to believe her and this man have a special bond, a relationship more important than any other in the house, that she should go to him if she is scared, that he will help her physically (e.g. with getting to sleep), that she is attractive, more attractive than her mum. She also believes her mum spoiled her relationship with her bio dad (not knowing he was a cheater and a neglectful parent), and I bet when this future attempt to dilute/break this 'special' bond happens, she will fight for their 'special' relationship just as much as he will.
It's all very shocking and disturbing.
Lay down the rules. Watch him not stick to them, tell you it's you with issues, that you are jealous/paranoid, that he is just being a good parent.
You need real, professional help with this OP. Do you feel up to calling the NSPCC?