What stage is dementia when there are hallucinations?

My husband drove to my daughter's house, told her he had her daughter with him and was taking her home (she no longer lives there, she's married, living in her own home). He said she was sitting next to him in the passenger's seat. She told him there was a cardboard box on the passenger's seat and no one was with him. He then said "Oh, she must have jumped out down at the corner". He proceeded to say, I have to find her. We are legally separated, no longer live together. He lives in an apt. by himself (the VA told him he could take care of himself).

That same day, he called me and said "Whenever I leave here I lock the door, so I don't know how anybody could get in here, but someone has been sleeping on my couch. They took some blankets and I can tell they've been sleeping there. He also insisted that his footstool was tipped over on its side and all the stuff he had on it was scattered all over the floor.

Another time, he called and wondered when I went home. He insisted that I stayed all night. Or, he will be in the bedroom and insist that there were a lot of people in his living room and says I was there, vacuuming....there have been several incidents such as this.

He's convinced that I'm having an affair with a doctor, says he's seen us go into motels, etc., etc., of course, there is absolutely no truth to any of this.

He should not be driving, even though an occupational therapist actually passed him. He was passed with many stipulations: no driving out of town, no driving while smoking, on the phone, at night; and he drives doing all of these things. He actually drove to a relative's 450 miles from here and had an accident. He had another minor accident here in town. He drives by here all the time, one night in the dark with his lights off, he has followed me any times. When I was running errands he followed me from one place to the other. A few months ago I was at a friend's house, when I left I went to a drive-up for carry-out and I saw him behind me when I was getting my food. 30 minutes later, he called and told me how long I was at my friends house and knew what I had for supper.

At what stage of dementia is this behavior. Since we're legally separated, I'm no longer responsible for him, but I'm very concerned. I have no legal right to do anything. Most of his behavior is directed toward me.

Thanks for any help, I'd really like to know if anyone has an idea how far he has progressed into the dementia.