I'm going to play devil's advocate.

If you wanted to maintain a relationship with your sister, you never should have tried to stipulate that she has to talk to your son. That's where you went wrong. You should have skipped straight to "I know you don't enjoy interacting with children, so from now on we'll hang out in a child-free environment."

She's angry because she thinks the only way to see you is to come to your house, and if she comes to your house she has to hang out with your kid, so she thinks she has to hang out with your kid to see you. Your son will always be a part of your life, but you can compartmentalize. Adults do it every single day. It would be nice if your sister cared about your kid, but she clearly doesn't. She does care about you, she hates that you are making hanging out with your kid a stipulation of having a relationship with you. I'm not saying she's right, I'm saying that's how it is.

She has even told you this up front, so I don't know why you are surprised. She's made it clear she doesn't want to hang out with the kid, she doesn't want the kid at her house and yet you keep pushing it thinking she will magically change her mind. You're not going to change her mind by ignoring her boundaries and making her uncomfortable. By forcing a relationship with your kid, you're making your child into a source of anxiety for her.

You can still easily maintain a relationship with your sister by hanging out sans child a couple times a month. Your husband manages to do it. You know she doesn't have a problem with older children. The more you try to force your child on her, the less likely she is to want to see him when he's older. You can spend a few hours a month not talking about your kid. Don't bring him up unless she asks, don't ask her if she wants to see photos or hear updates. When she is ready to move forward, she'll ask you. Give her some time to not have the kid shoved in her face.

I think you need to put on your big girl pants and apologize to your sister for trying to force her to be someone she's not. You were her best friend and her sister, she is used to you accepting her as she is and she incredibly hurt that you no longer seem to accept her life choices. She doesn't agree with your life choices, but she accepts them. She just doesn't want to participate in them for now.