I would suggest you consider the fact that focus "points" are not really points, but areas. They are often significantly larger than the viewfinder might suggest. Anything in that focus area could be what is focused on, not just what you (as a human) expect.
On some system it also helps if you use the contrast detect focus system in certain circumstances. Phase detect focus systems are TTL and will operate with the aperture wide open (regardless of what shot-time setting you use) with the aperture closed down automatically at shot time. Contrast detect systems usually operate at the aperture setting to be used at shot time, which means there is no danger of focus shift - a possible issue with some lenses, although I'm dubious this is your problem.
Flash technique leaves something to be desired and is not helping.
... are all indoor ... flash pointing towards baby straight (power of flash (1/128).
Never do this indoors unless you've a huge ceiling height.
Instead bounce the light off the ceiling or "white card". Point the towards the ceiling - i.e. not directly at the subject. This gives two huge benefits. Firstly it lets the light bounce off the ceiling in a diffuse way and spread out, getting rid of all that nasty direct flash effect. Secondly you can use more power (not 1/128th flash !) and hence a lower ISO.
This technique gives far more natural looking lighting.
Sometimes either the ceiling is too high or too far from white to be useful. For this reason I normally use a reflective gadget that can attach directly to my flash and act as a large diffuse reflective surface. The one I use is a Rogue FlashBender 2, but there are many variations on this. It looks awkward, but it works really well.
This is a more sophisticated version of the old "bounce card" trick used since flashes came about. You can literally rig something with a white card and some elastic bands - and I've done this myself. This basically directs the flash forward instead of half going backward when the flash is pointed upward towards the ceiling. The advantage of the flashbender is that the surface is much more reflective and can be bent (it has some stiffness to maintain shape) allowing better of control.
Careful choice of bounce angle and using a bounce card helps a lot.
ISO 1000, f5, 1/50 sec, 28mm - here the focus was shown on baby but turned out to be before on the mat when viewed in laptop. Noise visible. flash fired.
Probably worth reading up on the technique of dragging the shutter in this context and bounce cards.
The D7000 apparently has some issues with using high ISO when not needed with flash. This blog post from Francois Malan discusses it and offers some advice. The blog gives two potential workarounds :
- Set the built-in flash (setting e3) to “Commander” mode, then in the accompanying sub-menu to TTL mode. This prevents auto-iso from raising the ISO, but you have to live with the longer preflash sequence (since the camera thinks that it needs to control an external flash)
- Disable auto-ISO whenever you want to use the flash. This can be made more convenient by putting auto-ISO settings at the top of “my menu” and assigning the customizable fn-button to the top of “my menu”. But this remains a cumbersome solution and forces you to remember changing the iso setting dependent on flash usage – exactly the kind of task loading auto-iso is supposed to solve.
If all else fails remember that people shot completely manually for decades and it is not as difficult as it sounds, although it scares people when they start.
If you use these techniques you should be able to avoid the high ISO, the direct lighting effects and it might even help focus, as some systems use a "pre-flash" low intensity burst to help lock focus.