J.K.
My 2 1/2 yr old had the same problem with a horrid sounding cough at night. We finally took him to his pediatrician and after extensive testing they decided he had a mild form of asthma and put him on daily breathing treatments along with a prescribed allergy medicine. We started this in feb/06 and he no longer has that cough. We also have to make sure any smokers that come around wash their hands thoroughly before playing with him and we have asked them not to smoke 30 mins before coming over so they have time to air out. All of these precautions take extra time but are worth it when your son sleeps peacefully at night...I hope everything turns out well for you.