"Cultural" or "Natural" Predisposition
IMC sex and sexuality are seldom plot devices, my players feels a little uncomfortable with these kind of thing, maybe because they seems a little "mundane" (why bother with marriage or petty carnal desires when the realm has to be saved - again?

)
But certainly Homo/bi sexual behaviors aren't matter of "cultural peculiarity", acceptance (or the lack of) is.
Not so recent (but very documentated) studies show that Homo and Bi sexual behaviors occurs with certain frequency in the animal realm.
These behaviors can be expression of dominance, but more often than not this is not the case: Lions, Dolphins, monkeys, apes, and a score of others species under study have surprised a lot of scientists (put the word "Bonobo" on Google for a fast example).
But l go astray
Elves with a long life span and a more profound knowledge of inner-self probably generates cultures where acceptance of self is at premium and if you accept your inner self probably accept other's.
So I don't think that Elves are more prone to homosexuality than other races, probably they are more relaxed about this topic, they cultures doesn't socially "castrate" individuals which display different sexual behaviors or simply "experiment" (long life so much to experiment).
Elves will never have a word for "Sin" and without Sin there is no shame, no shame - no problems.
If - inversely - for the dwarves childbearing can be the greatest honor for a couple "blessed" by the gods of fertility. Intentionally renouncing to this opportunity (engaging in *exclusive* homosexual behavior) can be perceived as an offense to these gods (and to the community at large).
"If you renounce to a boon this like, you must be wrong"
Again natural propensity to homosexuality can be the same of other races but society restraints brand with shame the individual.
The individual become "wrong" on a cultural basis not on a natural basis. And prejudice arise.
Humans are by-the-books (of RpGs certainly) the race with more cultural color. In RW we had Greeks, Roman, Celts, Arabian cultures which recognized (or tolerated) homosexuality in a form or another.
It seems that male Celts, for examples, often considered sex with other men for pleasure, and sex with women strictly for procreation.
Christianity accepted sex only for procreative reasons (again to insure a future of prosperity for the community with children) and the relegated sex (in all forms) to a sinful thing.
Surely properly introducing sex (in all is forms) in a RpG, its a delicate affair, best handled by sensible hands. More often than not we can still have great games without.
I hope I haven't offended anyone, my skill in foreign language surely lack subtlety or political correctness (but heck I'm European

). I only tried to contribute a little to this fine thread.