I would be open and honest about what you saw and that you don't approve. It can be done in a calm manner and just talking. Don't "attack" her on why you think its bad, talk to her and explain why you don't approve and how its leading the boy on. Then let her know what can happen from there... Scary to think, but if she keeps leading him on and he tries something he might not take no for an answer.
Ask her what she meant by them... then explain what it really meant. Not saying she is... but alot of the kids I know around that age, what they are saying ( like your daughter) its what they actually meant.
You need to be very open with her. My mom was very open with me about sex. I knew what she wanted from me in return. Even though I always said that I was going to be a virgin until I was married... I was just a little past my 15th birthday when I wasn't. I "thought" I was ready. But I wasn't emotionally ready for it, like I thought I was. Thankfully I had that open relationship with my mom because I got very depressed because I had let myself down and was afraid to tell my mom because I thought I had let her down. That was the first time I was close to committing sucide, stupid I know. But instead of going through with it, I went to my mom. Her actions showed me that she really would be there for me no matter what and that I could talk to her about anything and she loved me no matter what.
The only reason Im sharing my experience is because to me anyways, it shows the importace of having that open loving relationship. If she wouldn't have told me over and over that I could come to her, who knows where I would or wouldn't be now.
Its scary because my son is now the same age as I was when I "started". Sometimes I look at him and think.. what the hell was I thinking?!? lol
Just be open and honest, that is always going to be the policy no matter who you are dealing with :) Good luck!