Your son has asked you to stop and you haven't. It is nice to remind him he is your baby but it makes him uncomfortable. I think you need to listen to him and stop.

As for your DH, he was simply supporting your son after DS has asked you to stop several times. I don't think he was undermining you, I think he was supporting his son.

Sorry if that is not what you want to hear. Both my boys have asked he to stop calling them baby so I asked what nickname they preferred. Both accepted honey or sweetie as an alternative so I use what they are comfortable with.