New poster. I've divorced a NPD (oh, and sex addict too, lovely, huh?).
I think you have a few issues:
1) Overnights at other people's homes.
Can you talk to an attorney about this? Do you have an official parenting plan? This can not be in the children's best interests, and I think you need to talk to an attorney. God knows what could happen to your children in an environment like that. Unfortunately, it's going to be up to YOU to stop it.
2) Badmouthing you to the children
This is terrible. I suggest you get the book Divorce Poison by Dr. Richard Warshak
Here is a quote from the book - it shows why you can't ignore what your STBX is doing/saying in front of your kids:
Bad-mouthing kills spontaneous displays of affection as children inhibit their behavior toward one parent for fear of disappointing the other, or appearing disloyal. They develop the guilty sense that they must keep their love for the maligned parent a closely guarded secret. This is what parents do to children when they fail to give them unconditional permission to love both of their parents.
3) Your children getting upset when STBX comes to take them.
Are they in counseling of any sort? Can you get them some professional help asap? Here's a link for this sort of help from the Women's Center in Virginia. I'm sure there's something similar in MD.
http://www.thewomenscenter.org/content.asp?contentid=59
OP, good luck to you. Do NOT let him win and hurt your children further. Please reach out and get some more help for them and for you. I'm so sorry you and your children are in this situation.