The couple is clearly divorced or seperated. Had they start living as a couple within the iddah, the divorce would automatically be revoked. But now that the iddah period has expired,they are now non-mahram, strangers to each other. But this divorce or seperation is one seperation, and every seperation has it way of re-union/re-marriage. Since the first option of re-union within the iddah is no more available, now, if this is the couple's first or second seperation, they may, if both are willing, re-marry on new terms and dower. But it seems that your brother is not willing to marry this woman again, rather he wants to get rid of her immediately. In this situation, your parents should let the woman leave your house immediately and your brother should pay her dues, if any, including the maintenance cost of the baby.Then you may wait for some months and see if the time heals the wound of your brother's mind. If so, and if the lady concurs, then a fresh marriage may be contracted between them.
Read the verses below
"Divorced women must keep themselves waiting for three menstrual periods; it is not lawful for them to hide what Allah has created in their wombs, if they believe in Allah and the Last Day. In such cases their husbands have a right to take them back in that period if they desire reconciliation. Women have rights similar to those exercised against them in an equitable manner, although men have a status (degree of responsibility) above them. Allah is Mighty, Wise." [Al-Baqarah 2:228]
“The divorce is twice” [Al-Baqarah 2:229]
“And if he has divorced her (the third time), then she is not lawful unto him thereafter until she has married another husband. Then, if the other husband divorces her, it is no sin on both of them that they reunite, provided they feel that they can keep the limits ordained by Allah. These are the limits of Allah, which He makes plain for the people who have knowledge”
Note that repeating the words "I divorce you" thrice, according to the above verses, do not constitute three seperations; it is one seperation. The people of most Muslim countries are mistaught by misconceived scholars that the words of divorce should be repeated thrice for a seperation to be effective, and once seperated, they cannot re-unite/re-marry without an intervening marriage of the woman with a second husband. But there is nothing like this in the Quran in case of seperation for the first or second time. For a seperation to take place once, it is not necessary to repeat the words of divorce thrice. Nor does the redundant repeatration of the same phrase makes any difference. As you hail from Pakistan, various books written by Pakistani scholars may misguide you to take this seperation as the third seperation instead of the first. Mind that you cannot toss off a book written by people instead of God's revelations in the Quran.
Could you please let me know if your brother divorced her any other time in the past in the same manner or in any other manner?