Hi B.,
What you have done is NOT a huge mistake! A 7 month old is not spoiled. If the sleeping with you is not working out for your rest, the method described of rocking and putting to bed asleep will help. Letting the baby cry it out will only cause more anxiety in the child as he gets older. You should always go to the child when he crys, survey the situation, speak kindly to him, and even hold him a while until he gets back to sleep. If, however, he is just awake - leave him to entertain himself with his safe toys and mobile. A healthy, well adjusted child will be able to do this a lot. If your child has any health issues that might be making him uncomfortable, like colic, make sure to address those before doing anything different. There is a group of parents who ascribe to something called Attachment Parenting, and the co-sleeping works well, sometimes with the whole family, for years! If the child does not accept the father's comfort, maybe he should be the one who comes in at night to comfort the little one until he is glad to see him. The child must have the experiences where the dad 'saves him' from lonliness and hunger and discomfort before he will attach to him. You can start by snuggling all 3 of you together, then leave the child with the dad when he falls asleep, or when he is distracted by play. Check out the www.api.com website for more info. I did not use the AP method per se on my children, but I did not allow my little ones to suffer colic alone - even once. Both my kids are grown now and they are well adjusted adults - anyone would be proud to have them in the family - but we have not slept together all night since they were tiny babies. I was always afraid I might roll on them, or worse, they might fall off the bed. This co-sleeping/attachment parenting is proven to create more well adjusted and non-violent adults than the old corporal punishment/cry yourself to sleep ways of the 50's.
Get some help, and get some rest, and you will feel worlds better. You may need to leave the house and take a nap at a friend's place while the husband bonds with the child to get real sleep and rest. You will be a better parent well rested, and that is really what I am hearing that you want to do. Remember that this parenting thing is a process, not a destination!
The Best to you,
D.