9:17 here. I think you made the right decision here. You are obviously a very kind and thoughtful person. But you need to protect yourself and your job.
It seems your friend's little boy may need lots of individual attention to help heal his past. I can't imagine it's an easy transition for him. Even if his difficulties aren't evident now, they will probably come to surface soon enough. Maybe you can visit with them on the weekends. Bless you.