Actually, both are correct- probably the MPC agent missed some context.
if you’re looking to redeem miles for the infant, #1- full miles, with seat, subject to availability.
if you’re looking to get an infant revenue ticket attached to the adult’s redemption, #2. Book the adult’s redemption ticket, then reservations should be able to book the infant in the lowest available revenue fareclass, for the appropriate fare (typically, 10%).