Greene surprised the party establishment with his primary victory in June. His arrest in November was first reported by The Associated Press the day after he won the nomination.
Authorities said he approached a student in a University of South Carolina computer lab, showed her obscene photos online, then talked about going to her dorm room.
A Richland County grand jury indicted Greene, 32, on charges of disseminating, procuring or promoting obscenity -- a felony -- and a misdemeanor charge of communicating obscene materials to a person without consent.
If convicted, Greene could face up to three years in prison for the misdemeanor or up to five years for the felony.
Greene declined comment at his home in Manning. He has refused to talk about the charge in past interviews, and his attorney did not immediately return messages seeking comment.
Greene had visited the computer lab at the Bates House dorm in Columbia several times before his arrest, using an old student ID card to gain admission, according to campus police records. Dorm staffers told police they had asked security staff not to let him in, but reports did not give any more details.
Greene graduated from South Carolina in 2000 with a political science degree.
Greene, an unemployed military veteran, handily defeated Vic Rawl, a former lawmaker and judge who had been considered an easy win by Democrats.
Up to that point, Greene had done no visible campaigning and had no Web site, fundraising or staff.
After AP reported Greene's arrest, South Carolina Democratic Party leaders called on him to withdraw his candidacy. South Carolina law prohibits convicted felons from serving in state office, but there is no such rule for the U.S. House or Senate.
Greene has said he's staying in the race. In the months since his victory, Greene has given a series of awkward interviews to reporters clamoring for more information on the man who lives in Manning with his ailing father. In one interview, he suggested that the state's economy could be improved by selling action figures depicting him in his uniform.
Earlier this summer, the state Democratic Party upheld his nomination, denying a challenge filed by Rawl alleging voting abnormalities.
State police also cleared Greene of any impropriety involving his $10,440 filing fee. Greene has said he saved up his military pay for two years, a claim police said was backed up by his bank records.
Last month, Greene gave his first public speech, a 6 1/2-minute recitation of his previous comments and commitment to jobs and education. On Thursday, he gave brief remarks to the executive committee of the state Democratic Party and asked them to support his campaign, according to executive director Jay Parmley.
Greene now has a Web site and says he has raised less than $1,000. He faces Republican U.S. Sen. Jim DeMint in the fall. The popular incumbent has raised more than $3 million.
Green Party candidate Tom Clements will also be on the November ballot. He has reported no fundraising.