Sorry that I didn't reply to this thread until now.
I think you made the right decision to wait.
I know you are a great dog mom and a great mom to baby Lydia too but I think that adding a puppy right now would be too much.
Enjoy every little milestone with Lydia, from her learning to crawl, learning to walk and her first words(doggie maybe?)then maybe it would be the right time to add another dog, possibly an adult one who is already mellow and housetrained etc.
Is there a chance that your friend would keep the dog for a year, get him trained and fixed then offer him to you at that time?