The calculation appears to be correct.
The 2020 Federal 1040 tax return reconciles the two stimulus payments. At the time of the reconciliation, the IRS is saying that the 17 year old was not eligible for either stimulus payment. If you did not have the newborn child, you would not have been required to pay back the 'overpayment'.
The IRS question C1 says:
Those with qualifying children will receive up to an additional $500 per qualifying child. A qualifying child is a child who meets the conditions outlined on our Qualifying Child Requirements page.
One of the qualifications of a qualifying child is:
The child was under age 17 at the end of the taxable year.
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