H.J.
Our son was 3.5 when we had our daughter. We went through the same exact thing. We sometimes still go through it. Since we are in a 2bd condo, the kids are now sharing a room and it has gotten better. We keep telling DS that he has to be a big boy and protect his baby sister. He also likes to go to bed with the light on. It actually doesn't bother me. I would rather leave the light on than have him throwing a tantrum and getting out of bed every 2 minutes. You should get a small lamp that puts out a small amount of light so he feels comfortable. Then when he is asleep, just turn it off. As far as the bed sharing goes, we are still going through it a few nights a week. DS will just wander into our room at like 530am and crawl into bed between us. The other morning I heard him come in and I changed positions so there was no room for him. He sat there for a moment and then tapped my leg. "Mommy, I am getting cold" he says. So I just said, "Well go back to your bed then." So he did, and hasn't come back in since. Don't fight him too much on it now. He just needs reassurance that he is still important and you still love him. I try and do something special with my son while his sister is napping. That way we have some one on one time together. Also hubby will take DS outside on the weekends for a while to have some time together. They also play games together in the evening time. Keep reading the books and then just tell him that it is now bedtime. Leave the light on and walk out of the room and shut the door. Keep the routine up and he will get the message.
I also do NOT agree with Toni V. Although we did try the baby gate thing and it did not work. 3 stories is perfect. You are supposed to read to your child at least 30 min a day. How is one story going to cover that? I do agree that you should all get on a schedule and routine. We started doing that recently and it has worked out great. 830pm is bath for both kids. Then brush teeth, for both. Then read a couple stories, nurse baby, and then bed. I leave the light on, but close the door. Both kids are in bed and sleepy at 9pm. Then I have time to relax before I go to bed.