The mom could firmly but politely stop the old lady. For example, she could say 'I'm not comfortable with this topic, let's talk about something else'.
No, it is not appropriate at all. Sex stories are private and often inappropriate for general conversation, especially between an old lady and a mom. It goes against social norms of propriety and may make the mom uncomfortable.
It could be that the old lady has some old - fashioned ideas about sharing life experiences, including some inappropriate ones, without realizing the inappropriateness. She might have thought it was a normal part of sharing wisdom from her own life.
Definitely not. This kind of story is a very private family affair. Spreading it around is disrespectful to your mother and also goes against basic moral principles. Family privacy should be respected.
Rather than discussing such a potentially inappropriate story, it's better to talk about positive interactions at work, like how colleagues support each other or how a team overcomes challenges together.
Rather than a story with inappropriate themes, we could talk about an old lady who enjoys flirting in a very innocent way, like complimenting the neighbors on their beautiful gardens and having a warm chat.