Blue Rose is spot-on. Seek a restraining order and keep everything documented - calls, visits, etc., so that you have plenty of evidence that this guy is dangerous. And, be prepared that the courts may not rule as harshly as you wish.
Be very cautious about diagnosing anyone as a "sociopath." Rather, use the term, "fits the profile of a sociopath." The reason to do this is simply because it makes the survivors sound like ranting lunatics, especially in court.
Under no circumstances should you discuss your daughter's personal issues, the boyfiend's issues, or any other ADULT issues in front of or with the children. They have no choice as to whom they were born to, and they don't have the capacity to process everything that has happened, to date. Leave the children out of all court proceedings, unless it's required by the courts as a ruling.
There is absolutely nothing that you can do for your daughter other than to be there when she makes her decision to leave. Focusing your energy on trying to "save" her is a losing battle and one that misdirects your focus from the innocent children onto a situation over which you have no control. She is going to have to make her decision (or, not) at some point. Having Survived domestic violence/abuse, it took me a long, long time to accept that I had made a really stupid choice by picking my ex and to begin formulating a plan to get the heck out. Please, forgive your daughter for her status as a victim and continue to let her know that you can provide a safe haven without judgement. Having said that, it's very important for you to maintain your personal boundaries even with your daughter.
I recommend a site that specifically addresses sociopathy: www.lovefraud.com Additionally, I recommend www.ndvh.org and (as much as I hate to say it) Social Services. You're going to need backup for your grandchildren in the way of counseling/therapy/positive guidance, possible restraining order(s), financial support, and your own individual counseling so that you will be able to define and maintain boundaries with your daughter.
Bless you tenfold, and best regards to you.
I would urge you to seek legal custody, ASAP. All the mother has to do is to demand that you return her children, and that's it. Unless an agency has "recommended" that the children remain in your custody, you don't have "legal" custody regardless of how dire their living conditions were. I know that sounds crazy, but it's true: the legal system has no feeling where upholding the Law is concerned. So, please, take steps to gain legal custody of your beautiful grandchildren.
Hang in there, okay? The reason that we don't discuss the evil deeds of the children's parents (in divorce, as well) is that the children often feel responsible for the choices of their parent(s). It's because they haven't developed the necessary Life's Experiences to process what is happening, and too often people throw the children into the fray without meaning to. Certainly, others do it with clear intention.
LoveFraud.com will help to thoroughly explain sociopathy and the ramifications of sociopathic choices.
Best wishes to you, my dear. And, work on getting legal custody as soon as you possibly can!
I want to talk about your daughters position and again Bluerose is on the right track, that your daughter must be suffering from depression or at least a very low self-esteem, not being able to stand up to a person who is obviously harming her.