Personally, it does seem a little like an overraction to me. My DD is 4 in June and sees DH and me naked and has done all her life - at 18 months she didn't care. She has gotten interested in DHs penis simply because it's different to her and me, but a little explanation and she's over it. Your DD touching just kind of seems like, at that age, "oh hey, that's different!"

With your DS, I wouldn't have thought the touching was intentional the first time. Kids like to be naked so I get why he was. The second time seems more like defiance to me, a reaction to the growling, and I do wonder if he would have behaved differently if you had reacted differently.

I guess, while you want to teach them about private areas and it's not at all appropriate to let his sister touch his penis and he does need that explained, I don't think the answer is necessarily to keep clothed at all times and never see anyone else naked, you need to work with what they're comfortable with.

I hope this is making sense, I feel like it isn't. But my younger brother and I saw each other and my parents naked until we decided ourselves not to, and we showed that first by not letting them see us naked. I think I was 10, and my brother 8 when I started closing the bathroom door. When we were younger it was just never an issue and I feel like I grew up with an appreciation for real bodies (as opposed to those in the media) and an ability to be comfortable in my own skin, because of it.