I don't have much time, but I wanted to say that I had a similar situation with being involved in sexual play with a group of friends.

When you really think about it... Dogs do it, horses do it, monkeys do it, most everything in the world does it except... Us humans.

Because we have all these religious and guilty and ashamed etc etc etc ideas about sex and about when it is and is not appropriate and so on and so forth.

But really... Well... Don't even get me started on Bonobo's and about how peaceful their society is lol.

I don't see any harm in it. As I said I had a group of friends when I was around 14-18 and we used to fool around like that. I've even... Gone to a party here and participated in some weird (partly sexual) 'circle of love' type thing (and hey I'm 29 now!)

Things to worry about:

1) Transfer of fluids. We know you can get meningitus from sharing drinking bottles... You can get stuff from sexual fluids... Similar issues with pregnancy if the game escalates...

2) If the atmosphere is okay then its okay (in my book) - I don't see any harm in it. But... Keep an eye out for someone maybe not feeling terribly comfortable with participating?

WIth respect to the 'performance anxiety' thing... If he gets an erection during REM sleep then you know it isn't an organic problem (and the problem is some kind of anxiety). Maybe... He didn't feel terribly comfortable with the games?