Yes, absolutely: I think Foley's actual motivation is probably randomly subversive and inchoate: nothing he does during the action of the novel suggests sexual abuse. But I think Selby's perception is almost certainly of a possible sexual approach, and Peter either is oblivious to Selby trying to say that, or doesn't want to believe it--Nicola understands what Selby's unease was about, but realises halfway through her sentence the implications of saying it aloud to her brother, even if she could articulate it.