There are a lot of things you could do to improve this picture.
I agree that you should have increased the ISO setting, but I would have gone to 1600 (if the camera is capable.) This will introduce noise, but we'll deal with that in a minute. If you had used 1600 as your setting, your aperture/shutter combination would be ƒ2.8/@ 1/160 or ƒ4@ 1/80 (You could even go to ƒ5.6 @ 1/40 but I don't recommend it - most people cannot sit as still as your nephew.) The higher shutter speeds should eliminate shake and as digital renders the image much more sharply than film you can get away with a wider aperture.
Now, the lighting itself. From the glare in his eyes, I can tell the main light was directly in front of him. Try this instead. Use the light without the umbrella to light the background. Put the light far enough away from the sheet that the light spreads out evenly behind the subject. This light should be one to two stops brighter than the subject (so your meter should read ƒ 5.6 @1/160.) Set the subject well away from this light and at a good distance from the backdrop. Then use the softbox at 45 degrees off of his face. Use a fill card (big white card) on the other side of his face. Use the hairlight to further seperate his head from the background. This will introduce some shadow area in his face and make the image more interesting.
Now, about the noise. Some of the most beautiful, interesting portraits I've ever seen were shot with 3200 ISO film, pushed to 6400. Pushing film increases grain. You can treat the noise in the image just like grain, and even use post processing techniques to emphasize it further. A technical limitation can almost always be turned into an aesthetic advantage. So, while many people would not think of taking a portrait at this ISO, go for it. If you want to shoot at a lower ISO, you will need higher wattage lighting.
Keep shooting and have loads of fun! Good start!
MFA, Photography, Photo Instructor