The problem is that he falls asleep nursing. I once read that you shouldn't let the baby "sleep nurse" because it creates a habit of the baby needing the boob in the mouth whenever they fall in and out of sleep. I've always tried to stop nursing once the baby is no longer awake.
Ideally, you want to baby to be able to soothe itself to sleep without needing the oral comfort. My suggestion is to stop letting him "sleep nurse". Start nursing, but if he falls asleep then pull the breast out of his mouth. It might take a few weeks to retrain him not to need a boobie in order to fall asleep, but you have to be consistent. I'm not saying you should limit his nursing, but he should nurse when awake or right before sleep--but no more extended nursing while asleep.
As for moving him to a different room, my two cents is that it will be harder and harder to get him to sleep in his own room the older he gets. I suggest you do it soon, because he'll hit a separation anxiety phase again, and it will be more difficult to get him to feel comfortable without you right there as he passes the age of 12 months.
And don't focus on whether the crying will wake the other up. It's amazing what kids can sleep through. However, you will have to be responsive whenever the baby cries to make sure there isn't extended crying. But little bits here and there shouldn't be too disruptive. You can always get the kids to bed earlier in case some crying occurs; at least with an earlier bedtime, your older son can make up for any missed sleep.