The child is probably possessed by demons and will transform and go berserk against your dwarves. There are probably other members of the cult of the Carp god around.
The other dwarf spying the facilities can be a diplomat visiting you. And you don't need to worry in this case. If he belongs to your fortress and spies the refuse stockpile, he is a necromant that will rise dead one day. If he spies the manufacturing process, it is something else, but nothing good, that's for sure.
You can place them to a temple of Armok (or was it altar?) and ask Armok for help. Then one dwarf will turn into Armok's ward and hopefully they can be cured. The easier way is to give their lives as a sacrifice to Armok on the altar. This way you will receive some nice weapons and armor.
You can read how Meph dealt with the same problem in community fort here:
http://www.bay12forums.com/smf/index.php?topic=125657.msg4217577#msg4217577