Not normal for a child to be pulling another child's buttcheeks apart. Looking is one thing, but touching is another and that is not okay behaviour. Do not change your son in front of him anymore and when you take your son to the bathroom, lock the door so this boy cannot come in. Do not ever let your child alone with this boy or leave at at this boy's home. I would also simply tell the child, "You need to keep your hands to yourself, it's not nice to touch or look at other people's private parts."
The other mother telling you she saw this, it must have made her uncomfortable too. My friends was molested at 3 and 4 years old, and grew up feeling sick about it, so yes, children this young can be affected by it.
Seriously keep a close watch on this child. Let the mother know what is going on. He could just be a curious kid, or he could be a victim of child molestation, or could be watching pornography with his dad. When talking to the mom, simply tell her what he did... "You child pulled my butt cheeks apart in the pool a while back, and tries to stare at my son anytime he is naked. It makes me feel uncomfortable that he would do this and I felt it important that you should know.