I had a co-worker (who out-ranked me) who had taken to calling me ‘fat boy’. I thought this was hurtful, and I told him to stop it. He thought it was funny, as we had known and worked with each other for several years. Again, I insisted that he stop it.
Finally, I said 'You call me that again and I will schedule a meeting with Nancy (our manager) and insist that you be reprimanded". He never called me ‘fat boy’ again.
Next time he calls you “baby”
projectile vomit on him.
I’d just be a little more direct with him. I’ve had people call me “Chrissy” (my given name is Chris). I tell them once that I won’t respoond to that name and then ignore them if they continue. It doesn’t take long to break them of the habit. I’ve been even more direct with fellow associates who try to casually touch me. I’m so not a toucher and I want them to give me my space.
StG
In a previous job, I had a rather large co-worker named Lou-Ann - one of the shop guys (african-american) used to call her “Big Lou”. She asked him politely a few times not to call her that - he didn’t stop.
The last time he called her “Big Lou” was when she responded with “Black Bob” 
Try the straight-forward approach - then go with the mildly-insulting comeback.
On a related note – I’m not terribly thrilled with older (female) waitstaff/servers who call me “hon” (If I don’t get their name, I use "miss/ma’am or sir)- but if someone is my age or younger - they get it right back, with a load of sarcasm.
I’d go with StGermain’s advice and simply ignore him if he addresses you as “baby”. After several attempts he’ll probably try your real name and then you perk right up with “Yes? Were you addressing me?”
It seems you want to have fun with this situation though. I think a funnier mispronunciation of his name would be “Blob”:
Lobb: “Thanks baby.”
Cazzle: “No problem, Blob.”
Lobb: “Er, what?”
Cazzle: “I said your welcome, Blob.”
Lobb: “It’s Lobb.”
Cazzle: “Blob?”
Lobb: “No, Lobb. L-O-B-B. There’s no ‘B’ before my name.”
Cazzle: “Well, mine’s C-A-Z-Z-A. My name doesn’t start with a ‘B’ either.”
Try explaining slowly, in a calm voice, that you have a pair of vice grips in your desk (at this point open a drawer and show them to him). Then mention that the average man has two testes, right?
Then mention that you don’t like being called that.
I suspect that will cure him.