try leaving it out in direct sun, for ALL day.
The sun is supposed to be a natural sanitizer....
Is your son "missing" his lovey? Will he take a substitute or another of your Hubby's shirts? My son has a stuffed cow that he's had since 6 months old... and although I have a "back-up" cow... he will not "love" that one as much as his original cow.... even though they are the same cow. My son, "likes" the stinky-smell of it....LOL. But he will let me wash it... sometimes.
"dampness" is often a hard smell to get rid of.
Try do a Google search on it.
Good luck,
Susan