Jenarry, what a horrible situation to be in - particularly as your own little family life seemed to be a good place, with your own baby on the way.
I can't believe SS have suggested your taking on another baby - it seems incredible to me to suggest that, or for your parents to take on a new baby either at their stage of life - but what a difficult situation. I have not heard of the wider family being involved like this, but obviously it must happen.
I can only echo what others say, that sad though it may seem, you have to think of your own family and your parents' welfare. This situation is not of your making, it's your brother's situation - you may have to stand your ground. I can't imagine what it would be like in future, if you adopted your brother's child - he would never be able to tell the child, you would be its parents. Extremely hard all round.