Im just joshing with you, Peter, unfortuneately (for James, that is), Lily does not have a cock. Im not so sure about the James thing, but I'd think so, it sounds rather true. The whole story is basically: James is a bastard who thinks that Remus would do him, but he wouldnt really, but then he apologized so I guess the Marauders are all good to go again.
I do remember that conversation, however unlikely that might be and I never did find out who that was. If you dont like him anymore, you should tell your old pal Padfoot. He'd never tell. Never ever.
P.S. Ill take a bow for that.