Mukta, I was doing exactly what you do, holding hands until she fell asleep, then when she woke she wanted my hand, so I put a bed in the room and held her hand all night, result was that not just my hand but I became the prop and I had an even bigger issue. What I realised was that I had to move myself away from the cot gradually and then I started the WIWO to get me out of the room completely.
Other than a little tweaking here and there with naps and bedtime I think that the main problem is that he needs you to help him to sleep, he wakes and needs you to help him fall back to sleep, hence the reason that he falls asleep happily in your bed.
I also think that you feel guilty when you try to withdraw from him because he cries, but that is good, because when he cries you go and tend to him, which is giving him the reassurance that you are there, so in a weird sort of way, him crying and telling you he needs you is all part of the plan in a way!
So, try to stop feeling guilty and remember that you are sleep training him for his sake, your sake your DH's sake, and your new baby.
Oh, and change the name of this thread please, you are not a faliure by any means and you will do this!