Well, if you want to be a little evil about it, you might bring up this behavior to her as if you are "concerned." As in:
"You know, Flashy, sometimes as we get older, dementia starts to settle in before we even realize what's happening. And one of the first signs is acting out sexu@lly toward people that in your rational mind, you KNOW would be inappropriate. I noticed that you flashed my husband at the BBQ the other night and then, at the beauty salon, you crawled onto his lap. I know that if you were thinking clearly, you would KNOW that this behavior is embarrassing and upsetting for your son, my daughter, not to mention both of our husbands. So maybe you should consider making a doctor's appointment to get checked for early onset senility, or maybe even Alzheimers?"
This works on a couple of levels because it's about you being "concerned" instead of angry, and you're trying to be "helpful" instead of accusing. And if she responds that she is NOT senile (because I'm getting the impression she might be pulling this sort of stunt to prove she is still young and sexu@lly desirable) then you can smile and say, "Oh, then you know better than to ever try anything like that again."
ETA : If you discuss this with her, it will inevitably come down to her telling you that you're too uptight and JEALOUS. So both you and hubby need to be on board with making your boundaries clear. If she crawls on his lap, he needs to stand up, get her off of him and tell her "Don't do that." If she flashes him, touches him or speaks to him inappropriately, he needs to tell her, "Stop that. I don't like it."