19 yo boyfriend gossiping with his 30 year old teacher friend(my maths teacher 6...

[SS]

...years ago & his old teacher)? So this is out of extreme curiosity to see if I'm blind and oblivious to the situation or if I am over-reacting or if I deserve it.
So I've been going out with my boyfriend for about a year now, I'm a year younger and we met several years ago through school but nothing happened until last year after we were both out of school.
There's this person who I now realise is his 'great' friend, and who was my maths teacher in year 8 for a semester or so, lets call her...Sarah. Lets call my boyfriend...Matt.
So anyway, somehow along the way I realised that Matt was friends with Sarah and I had no problem with that, in fact, I was rather glad to catch up with Sarah at one or two dinners because I thought she was a great teacher and a generally really nice person. So this was all fine. She never actually made much of an attempt to talk to me, but I figured thats because I'm naturally shy, or something, it didn't really seem significant.
I stay over at Matt's place a lot, generally because I just really love spending time with him, etc, and so I tend to invade his space(nicely of course) and do things such as look at his msn conversations.
So maybe in the past...6 months I've sort-of read his conversations without him really realising or caring, and one day I was looking at a conversation with him and Sarah, and I noticed their topic of conversation was me and honestly, it was not a pleasant conversation. So because my boyfriend had saved previous conversations, I looked through all the conversations they had, and noticed exactly how much bitching was going on about me, and a lot of derogatory stuff from her that she can't have known much about. From a further point on Matt decided he would lock his computer whenever he wasn't around it and I was there because the conversations a bit after this first realisation were still derogatory.
The locking does work sometimes, apart from his lapses in memory that I will go look at his computer if he's not there.
So I've discovered yet more bitching about me, my inadequacies, etc etc.
We've had several words and he's promised not to gossip to her about me ever again, but of course, he keeps doing it.
And it's just derogatory stuff, really really hurtful stuff, and I know that Sarah really enjoys gossiping about it, she never tries to talk to me like an adult, or discuss Matt with me, she doesn't communicate with me whatsoever really, apart from when she has no choice or when she thinks something is wrong (that she can gossip about). Also as an important note, she knows a lot of people I know and she wouldn't think to stop gossiping with them either.
So you get the basic idea of the situation, my problem with this situation is that I think:
1.From Matt talking to her and bitching to her (he exaggerates a lot) I feel that she will pass derogatory comments onto other people (and me being a shy person doesn't help)
2.That Matt will treat me even worse than he does now
3.That it will make us grow apart even further
4.That I will become so mad at him, I will lose all respect for him and I won't want anything to do with him.

The problem is, I don't know what to do. I know that I shouldn't be looking at his msn conversations when he asks me not to, but that's only ever because he's bitching about me and he knows he shouldn't and he knows it's not fair on me. All I am doing is reading one msn conversation.

I don't know whether to tell him to stop talking to her forever or else we break up, to just leave it alone, to tell her to bugger off or I break up with him and therefore is her doing, to just get mad at both of them constantly and have Matt break up with me, or what.
I don't know what to do.
Btw...this isn't mentioning this girl who is supposedly a loner, who I've known since forever and who is the sister of Matt's friend...
Matt drove her to this huge after school week long party on a coast at about 1 am in the morning, decided he would only text me about it and of course I was asleep, when I found out about it, apparently he drove her and her friend "Jessica" which was actually a lie, it was just her, because apparently he's trying to get her to break up with her 40 year old boyfriend. Now I am fairly sure he wouldn't do anything with her, but that whole thing irks me...not to mention he changed her msn name to this guy so I wouldn't realise it was her he was talking to.
Anyway...help...what do you think I should do...????
P.S. please, I don't appreciate any comments telling me to mind my own business, please, I really need and appreciate constructive comments. Thanks.
To the fourth answerer, he doesn't save the conversations anymore because I looked at them

[FFCardenas]

Sorry to say but if he is complaining about you to sarah and sarah is dishing right back at you too then the relationship is gone. It's wrong for him to do that but do you think by working everything out it's all going to be back to normal? Just move on. Even if you too were to straighten things out, the relationship wouldn't last because your always going to be insecure about him for now on. So staying with him is only going to make you miserable in the long run. Your young, and your current relationship isn't going smoothly and looks like it's at an end which is like an invite for you to date other people. Take my advice. Just move on and stop emotionally abusing yourself. He is a jerk and doesn't care about you obviously. Don't let him run over you like that.