I will go back to a previous save before she was my girlfriend. I didn't know about the Neighborhood Stories System settings until you mentioned it and will make sure the setting is checked off.
After I went back to the furthest save I could retrieve his girlfriend was still pregnant. Argh.
I will start over.
I think in the rules make sure to mention to have Neighborhood Stories checked off. I would hate for someone to lose their game. Thank you @oshizu
@mariposa1127 After discussion within the Challenge Team, we've agreed that you don't need to start over.
The heir having a child before moving out was caused by a new gameplay feature, not a gameplay error on your part.
And, yes, we'll be posting about the NSS settings on most of the other dynasty challenges today.
Edited to add:
My apologies for the incomplete solution.
If you wish to continue your current save, have your heir choose a new girlfriend or spouse-to-be (as if the baby with his first girlfriend never happened).