Poor little guy! He's very young to be away from his mom and littermates. You and DH will have to work extra hard to be sure that he gains the social, physical, and emotional stability that he would have otherwise had.
When we got Casey, she howled through the night, simply becuase she wanted to be with us. That's just the temprament she's always had. We got a large hot water bottle and wrapped it in a towel, as the vet suggested. Case always had sensitive skin and she didn't water being next to something warm all night to cause her to chaffe or break out. Over top of that, we would wrap the undershirt that DH had worn all day. We jsut went to Wal-Mart and got several packs. If any got soiled, we pitched them. Everything else just went into the washer with bleach (and then got washed again with just water... like I said, sensitive skin).
He's probably too young to be eating soild foods and his food will need to be soaked to soften it. Be sure also that you're using something very, very gentle on their stomachs. We went through a number of foods before finding one that Casey didn't have diaherria with. We ended up going to the local grain and feed store and found excellent, natural food. ETA: Many pet stores allow you to return food if you have used only a small amount of it and the animal becomes ill. If, for some reason they don't (ask before you buy), donate it to your local animal shelter or a rescue league. It's always needed and greatly appreciated!
If you want him to sleep in a crate, you can't take him to bed with you

Yes, it's tough. But, consider how confusing it would be for him if you slept with him in the bed several times and then decided that he wasn't allowed on the bed or furniture. Be sure that you have your mind made up on the house rules and then always enforce them. It's easier to ever let them do it.
Lastly, putting your other dog in HIS crate doesn't sound like a really good idea for either of them. For one, that's HIS crate. His home, his place. Same with bedding. If you find something he likes (like lambskin), that should be his and only his to use. Secondly, you run the risk of a territory thing and the other dog freaking out on him. Being as young as he is, he cannot get into a fight or hurt. Hopefully, your resident dog will come around and mother/father him a bit. That would help with this early separation. Once his shots are up-to-date and he's allowed to go a-visitin', be sure you get him socialized really well.
Good luck!
xoxo