Thanks everyone.
The neighbour has, and will continue to document what she hears. Mr.S and his sister went to see their dad's consultant yesterday to make him aware of the situation, and it turns out that he saw through the gf the first time he met her. He is going to strongly advise my FIL to move nearer to all of us, and reassure him that it won't cause him as much stress as he thinks...we will be on hand and can more easily drop in to see him a couple fo times a week, help out with the garden etc.
I've been in touch with the Alzheimer's Soc, and am getting some good advice about what to expect, and a bit more clarity on the legal issues.
Mr.S and his sister are also going to counselling sessions together, so they can put some coping strategies in place as he deteriorates (they also have a nightmare mother, which is not helping - but that's another story!!).
But the best thing is that FIL has decided he wants to 'take a break' from his gf, and is not going to see her or contact her for a month. Which is brilliant news.
Thanks to all of you for your help, support and advice - I really do appreciate it xx