I’m sorry to hear of your difficult situation and understand why you are so upset .
Personally I’d sit down and talk to him about his responsibilities to his child. How many nights a week is your DHS staying at your house now? Can you fit another bed into your sons room so he can have his son to stay at weekends ?
Make sure your son knows that you will not be “ babysitting “ your GS - that’s not needed as he has many nights a week child free. Nor will you be doing any parenting - cooking meals for DGS, washing his clothes.
I’d ask him about clothes and toys for his son, car seat, buggy etc. What are his plans for buying and storing these things?
What are your son and DIls plans regarding residence in the long term?
Is your son going to rent his own place and have his son 50% of the time? How is he going to organise his work around this ? Has he talked to his employer about going part time or rearranging his working week?
I think you need to face him up to the harsh realities of being a single parent. Less money, less freedom, more work, more responsibility.
Parenthood isn’t something you get to opt out of because you “ need space “. He needs to deal with these issues now, his sons life can’t be put on hold while his father sorts out his issues.
I’d try to stay out of your sons sex life TBH. Not because you don’t have views, but because nothing good will come of you getting involved. I would say that I didn’t want to confront evidence of what he was up to in my bins and to dispose of condoms / Viagra etc else where / discretely .
I’d simply say that I was very sad to know that he and DIL couldn’t work things out, but I respected his right to make his own decisions about that.
However he can’t opt out of being a dad.
As PP have said mid also make sure he is contributing as an adult in your house - doing a third of the housework and paying his way.