OK, I was kinda just reading only, thinking, hmm, what to say... until i got to your last paragraph.
She may have a phd in psychology, but she failed her frigging NVQ on sisterhood....
She's been making a huge fuss of him since the day he was born, and now she's trying to tell you to back off a bit... WHAT?
I know she's your sister, and all that, and ordinarily family sticks together and all that, but FGS, that woman is trying to come between you on some warped level.
Arrange to be out as often as possible, put some distance between your sister and your son, sounds like she's overly attached and now trying to pull something wierd with the relationship between you and your son. Has she always been hellishly jealous of you?
If you do happen to be there when she pops round, Keep calm, don't give him over to her and if need be, say he's having his nap, feed, i'm playing with him, whatever - if you have to, remind her that he is NOT 'her baby', he is yours and you'll be grateful if she could spare her pop psychology for someone who wants their life/relationship screwed up.
She is WAY OUT OF LINE!