Hello, I'd like to help you with your question.
You are right, what your boyfriend and his daughter are doing is inappropriate. No father should be sleeping
in the same bed with his daughter, especially a teenager. And they definitely should not be kissing and touching the way you describe. Missing his daughter and spending time together should not include physical touching and buying her clothes that say "sexy". That is crossing the line between a father /daughter relationship and moving into an incest relationship.
You mentioned that you tried to talk about the issue with your boyfriend but he is defensive and refuses to see your point of view. From his reaction, it seems apparent that he intends on continuing these actions towards his daughter. The fact that he is in a relationship with you but puts his desires first means that he is not seeing the importance of your relationship. Although it is ok for him to tend to the needs of his daughter before his relationship, it is not ok to pick affection with her before your feelings about him and the relationship.
Since he will not listen to your feelings, he leaves you with little choice but to either accept the relationship he has with his daughter or to leave the relationship. You may want to consider counseling for yourself and for him, if he would agree to it. That way, you can talk to a therapist about the issues here and let the therapist help you get it across to him the inappropriateness of the relationship between him and his daughter.
I hope this has helped you,