A Nicholas County (West Virginia) deputy and a state policeman went to arrest 28-year old Kelcey Nicholas for violating his home confinement. They arrived to find Nicholas having sex with 21-year-old Lataura Jarrett. Nicholas is married to Jarrett's mother, so he is her stepfather. Jarrett is married to another man. After consulting with the county attorney, police charged both Nicholas and Jarrett with incest, a felony that carries a 5- to 15-year sentence. West Virginia state law includes "the natural daughter of a person's husband or wife" in its definition of "daughter."
You can see why the law is written this way: to protect children in the family home from sexual assault by a stepparent. But should it apply to a 21-year-old woman? Jarrett was 16 when her mother married Nicholas, a man only seven years older than her. Jarrett moved out of the family home when she became an adult, but the article does not make clear how old she was then. The two have been charged with seven counts of incest each. If there was sexual contact between the two before Jarrett reached the age of majority, it would only make sense that Nicholas would be charged with more counts. The news article does not say how far back the charges go. -via Arbroath
I find the Woody Allen offense a lot more disturbing than this but maybe that's because we know more of the story.
Having sex with your wife's daughter, your step-daughter, just isn't right, whatever the age or relationship. Even if no parental/authoritative relationship really exists, he was still probably taking advantage of his step-daughter.
Over all, leave them alone to seek therapy as needed for their own situations.