YANBU, agree with all others, especially Hissy best to be clear now before the day so she can plan some activities or get a nice dvd etc for Boxing day, and with thelaundryfairy make other plans now for after Christmas break or your holiday.
If the child started chicken pox on Monday there are no guarantees he will not be infectious, at all!
Please make sure your friend knows she cannot bring her child which almost certainly means she cannot come but it cannot be avoided.
www.nhs.uk/conditions/chickenpox/Pages/Introduction.aspx
www.nhs.uk/Conditions/Chickenpox/Pages/Prevention.aspx
People with chicken pox need to avoid contact with avoid contact with:
pregnant women
newborn babies
anyone who has a weak immune system, such as people who are having chemotherapy (a treatment for cancer) or taking steroid tablets
I would also (personally) add to that list anyone who has not yet had chicken pox, either adult or child.
Although you may know all your guests well you may not know whether any women are pregnant or who has a weakened immune system. You may also not know who has not yet had chicken pox, either adult or child.
There is a vaccine against chicken pox available. My son has been vaccinated against it.