What does this weird nightmare mean?

Unfortunately, it seems as if you sub conscience has blocked out traumatic events of your past. If your grandpa did do something inappropriate with you as a child, then as a safety net your mind has mostly blocked those memories, which explains why you can't remember everything. The dream could very likely be pits and pieces of lost memories, or your conscience telling you that something was wrong with the situation. A parent, or if your not comfortable with that, a counselor or therapist could be a good listener in helping you sort through the memories.