Thanks for chiming in with your professional opinion.My views of the case as a prosecutor
1) MM saw something that just didn't seem right, and by seem right, I mean he thought there was something sexual in nature going on. I based this on the fact that he called his father that night and met with his dad and Dranov that night. He isn't doing that for simple horseplay.
2) That being said, I don't think that he saw enough to be sure that it was sexual in nature. Otherwise, I have to believe, that either he would have stepped in, called the police immediately or his dad or Dr Dranov would have done it. Dranov definitively testified (please correct me if I am wrong) that he did not think what MM told him was something that needed to be reported to the police. The fact that his Dad, Dranov, GS and TC all did not believe they heard something that needed to be reported to the police seems to indicate that MM did not clearly express what he saw as being sexual
3) I certainly don't think he clearly indicated to Paterno, TC or GC that he saw something sexual in nature. To believe that all of those men plus MM's Dad and Dranov all knew that MM claimed to have seen Jerry molesting a kid and were all cool with not reporting it is unimaginable to me. This would have all required a conspiracy as well, since if MM did report something sexual, they would have all had to agree to lie to Spanier about it if Spanier subsequently asked or Spanier would also have had to be included in a conspiracy. Can't imagine the conspirators deciding they should then contact the 2nd Mile....
4. I simply think GS and TC interpreted what MM was saying as horseplay, I don't that's what MM said though, no reason to call dad that night otherwise.
5. Memory is a tricky thing, most people view memories as if its a photograph, forever imprinted in your mind. Most shrinks testify that a memory is actually always changing with time, testimony 10 years later about an event is usually different than what you initially perceived. It's funny, to test that out I looked at some old videos of sporting events that I remembered, and my memory was not nearly as close to the actual events as I remembered.
6. When the news first broke, I did not believe any of the criticisms of the OAG. However, their handling of the indictment where they said MM onviewed a rape (which MM specifically told them was incorrect) and the use of Baldwin's testimony (I cannot even begin to describe how unethical that was) made me think twice.
7. OAG charged the hell out of that case, that was clearly designed to get someone to flip. No one did.
8. In the end, they should have called the police. If MM was worried enough about the conduct to report it, there is no harm in calling the police and let them investigate.
9. It's funny, even though I think that GS had the least criminal culpability, I think his failure might have been the greatest (besides MM's). GS had a duty to protect the school, and he had the education level and expertise to understand what could be at stake (not just morally, but liability wise as well) and should have made sure the police were contacted.
One small point of contention; you wrote: " I based this on the fact that he called his father that night and met with his dad and Dranov that night. "
There's pretty significant reason to believe that he did not talk to his father/Dranov the same night that the shower incident occurred (either that or all three are lying about the date).