There are a few strategies to use against Josephine. She doesn't turn invisible, merely casts Blind on you; you can hide (or drink a shadow potion) to wait for the spell effect to wear off, or use an area effect spell that does not need a target.
Chasing Josie... techniques for defeating Josephine
Share your monster killin' tricksYou need to cast Aura of Command on summoned or resurrected creatures to get them to follow you.
The fate of the baby is revealed in Beyond Divinity.
Welcome to the forum.
If you really must know now, what happened to the baby is described in the Beyond Divinity prequel novella (included with the original UK release and in a fan pack with an audio CD) and in the game itself. I posted a summary of it
here.