Of course it wasn't okay. But if they became involved when they claim they did he would not be a pedophile. And if he was, as Coco Belle said, it is extremely likely there would be more victims.
Let's say that his story is the truth. Do people really believe that he didn't have sexual feelings for her until the day she turned 18? That when she was 17 years and 364 days old he felt nothing? Of course not. He lusted after his underage step daughter. Whether or not he acted on those feelings until she turned 18 does not change my opinion. He is a sick man.
He was her father figure. Regardless of age, becoming involved with your "daughter" makes you a pedophile and incestuous IMO.