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It appears your neighbor is trying to obtain what is known as a "prescriptive easement".
I believe this is what is being referred to incorrectly as 'squatters rights" Someone can acquire an easement over another's land for a particular purpose if he uses the land hostilely, openly, and continuously for a set period of time. In Ohio that means 21 years or more. All element must be met openly, hostiley, and continuously for 21 years or more.
In evaluating your situation the time requirement appears to be met (over 40 years), use was open in that you could observe the use. However the last component hostiley requires that the use be done WITHOUT your explicit permission. Since you gave permission your neighbor cannot claim a prescriptive easement
Based on your description you can stop your neighbor from claiming the use of the driveway though "squatters rights".
There are other types of easements that can be created and these may be applicable and require more facts then presented here.
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