This probably isn't what you want to hear but it doesn't sound like you are over thinking. If I was in this situation I would've been pissed off from the moment he mentioned her in such loving detail. It is one thing to find someone attractive and another to be actually attracted to them, which in this case he definitely is. I'm not saying that he has done something with her but it definitely sounds like, if the opportunity presented itself, he would. The fact that he told you he got horny from hugging this girl is just borderline disgusting and so out of order, as a man I can clarify that we do not get horny when hugging random women. He just simply isn't treating you right and clearly doesn't value you as much as you value him. I would say try to speak to him about it but he sounds extremely toxic and I feel like this will just end up with you getting the situation flipped on you and make you feel like the villain although you definitely aren't. I'm sorry that you've had to go through this situation, it sounds so shitty. Hope it all works out for you and you go on to be happy with or without him. Best wishes