PB - I'm not sure I believe in a God either but I do believe animals have spirits. Your question on when a spirit or soul enters a baby, is as ever, a tricky one. However I think it is done before it is conceived, i.e.it will chose its parents (lots of literature to say that people who die, come back into the same family becuase they can't let go). Embryos, the same. I also think that we, at whatever stage of conception chose to die either at an early stage or a later stage, depending on how as a spirit, we are evloving.
Lots of people believe that the sins you do in this life, you pay for in the next so it could well be that a spirits should learn what it is like to be born as a baby and die or it may be here for something its parents are to learn as part of their evolement.
Waiting room - again lost of literature on this. People who have died and been bought back to life again often say they have been in a sort of waiting area with people they know and people they don't know but then you are taken to another area to ponder on the life you have lived and the lessons you have learnt. Not remembering this myself can't say exactly but buddhist monks who have died, have picked out from hundreds of items, the ones they used all the time in previous life times and they could have been only a matter of a few years.
I do not believe in eternal damnation, this is put into the minds of children and people by idiots who like to scare them from going elsewhere and having thoughts of their own.
With regard to doing something wrong before it knows its wrong, then there is innocence and this would be dealt with after death and before being reborn.
Sounds weird doesn't it!!