It's a pretty unsettling feeling for a young woman to feel sexually looked at by her own male relatives. Since her feelings are important here (not the back and forth between you and K), I would recommend that you drop the discussion with K and keep your distance from your niece. If you cannot control the desire to look, I really would avoid being around her entirely. Even if you have no intention of looking or making her uncomfortable, she probably already feels uncomfortable just being in the same room as you and K. These kinds of things can really affect young women more than people often realize. I'm glad that it seems her immediate family has come to her defense. Some families dismiss this kind of thing and don't protect the young woman. I know you mean no harm; I would just avoid being around her.