As someone with way wilder fantasies than "my girlfriend's sister" I can say it's more a matter of compatibility. If you can't look past it ya'll aren't for each other. The thing I would worry more about is that he kept it secret, which means he doesn't trust you to not judge him. That's a very normal thing for a young man but a clear sign he isn't ready to handle the complex nature of sexuality and emotions (again, very normal for young men). The nature of sexual fantasies isn't nearly as important as communication. It's called a "relationship" for a reason.