Lactose intolerance is rare in babies but can develop as we get older, if lactose intolerant even breast milk won't be OK Cows milk protein allergy is more common in babies and is often grown out of.. small amounts of cows milk protein MAY pass into breastmilk but not necessarily... butter is fat, contains only traces of protein anyway... and I think the processing in heating milk to make a sauce, and processing for cheese, may change the structure.. also if he is starting to outgrow the allergy, that would explain why he is starting to tolerate cheese sauce etc... http://www.theallergysite.co.uk/dairy.html http://www.kellymom.com/babyconcerns/food-sensitivity.html http://www.drgreene.com/qa/lactose-free-milk http://www.calgaryallergy.ca/Articles/English/milkallergyhp.htm