well the first thing I would look at is the yellow/green discharge coming from baby's nose...this is a different situation than clear runny discharge coming out of the nose at the beginning of a cold which changes to the yellow/green discharge towards the end of the cold or flu. definitely take your baby back to the dr., and if you don't like what you are being told, seek out a second opinion.
I agree, it is helpful to cut out dairy whenever your baby has excess mucous or phlegm. It will also help if your baby has any diarrhea (cutting out dairy). Look at your son's diet, & consider consulting alternative health resources to help support you in getting him well. Two good books I use often with my son are "Healthy Healing" by Linda Page (a naturopathic dr.) and "Smart Medicine for a Healthier Child" by Zand, Rountree & Walton. They are reference books & list all sorts of illnesses & the various western (regular medicine, like your Pediatrician) as well as alternative health care treatments for those conditions. They have ideas on diet, medicine, herbs, bodywork, and anything else that can help. Healthy healing also has a great website you can check out first to get some ideas, www.healthyhealing.com
Is your son taking a multiviamin? My son loves to take a liquid vitamin I got from Raley's, it tastes like berries & seems to help boost his immunity & energy almost immediately. When my son has a cold (he is 2 now, but I started this when he was less than a year old), I also give him a very diluted dose of Airborne (the over the counter fizzy tablets that you dissolve in water, to help fight colds) or Emergen-C packets. Lots of juice (fresh is best), dilute 1/2 & 1/2 with water so he doesn't get too sugared-up. We use a vaporizer to help loosen phlegm (you can put a drop or two of peppermint or eucalyptus essential oil in the water), and on occasion use a nebulizer if he is wheezing. You can also use some Vicks Baby Rub (like Vapo-Rub, but for babies), rub it on his chest & belly, it is soothing & smells very gently like lavender & eucalyptus. When you give him a bath, try putting a little peppermint or eucalyptus essential oil in the bath (about 3 or 4 drops is plenty), stir the water around well before you put him in (this is if you use a full tub of water! if you are still using a baby tub, use only 1 drop.)
Can you take your son out of daycare? It sounds like this might be the root of the problem...even if you do so for just a few weeks, to see if he gets healthy, it might be worth considering...maybe look at what other childcare arrangements could be made, in the interest of his health...
Hope this helps, it is so frustrating to have a sick child!