I believe the you are referring to the ayat:
وَقَاتِلُوا فِي سَبِيلِ اللَّهِ الَّذِينَ يُقَاتِلُونَكُمْ وَلَا
تَعْتَدُوا ۚ إِنَّ اللَّهَ لَا يُحِبُّ الْمُعْتَدِينَ
Fight in the cause of Allah those who fight you but do not transgress
limits; for Allah loveth not transgressors.
وَاقْتُلُوهُمْ حَيْثُ ثَقِفْتُمُوهُمْ وَأَخْرِجُوهُمْ مِنْ حَيْثُ
أَخْرَجُوكُمْ ۚ وَالْفِتْنَةُ أَشَدُّ مِنَ الْقَتْلِ ۚ وَلَا
تُقَاتِلُوهُمْ عِنْدَ الْمَسْجِدِ الْحَرَامِ حَتَّىٰ يُقَاتِلُوكُمْ
فِيهِ ۖ فَإِنْ قَاتَلُوكُمْ فَاقْتُلُوهُمْ ۗ كَذَٰلِكَ جَزَاءُ
الْكَافِرِينَ
And slay them wherever ye catch them, and turn them out from where
they have turned you out; for tumult and oppression are worse than
slaughter; but fight them not at the Sacred Mosque, unless they
(first) fight you there; but if they fight you slay them. Such is the
reward of those who suppress faith.
Al-Baqara ayat 190-191
يَسْأَلُونَكَ عَنِ الشَّهْرِ الْحَرَامِ قِتَالٍ فِيهِ ۖ قُلْ قِتَالٌ
فِيهِ كَبِيرٌ ۖ وَصَدٌّ عَنْ سَبِيلِ اللَّهِ وَكُفْرٌ بِهِ
وَالْمَسْجِدِ الْحَرَامِ وَإِخْرَاجُ أَهْلِهِ مِنْهُ أَكْبَرُ عِنْدَ
اللَّهِ ۚ وَالْفِتْنَةُ أَكْبَرُ مِنَ الْقَتْلِ ۗ وَلَا يَزَالُونَ
يُقَاتِلُونَكُمْ حَتَّىٰ يَرُدُّوكُمْ عَنْ دِينِكُمْ إِنِ اسْتَطَاعُوا
ۚ وَمَنْ يَرْتَدِدْ مِنْكُمْ عَنْ دِينِهِ فَيَمُتْ وَهُوَ كَافِرٌ
فَأُولَٰئِكَ حَبِطَتْ أَعْمَالُهُمْ فِي الدُّنْيَا وَالْآخِرَةِ ۖ
وَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ
They ask thee concerning fighting in the Prohibited Month. Say:
"Fighting therein is a grave (offence); but graver is it in the sight
of Allah to prevent access to the path of Allah, to deny Him, to
prevent access to the Sacred Mosque, and drive out its members. Tumult
and oppression are worse than slaughter. Nor will they cease fighting
you until they turn you back from your faith if they can. And if any
of you turn back from their faith and die in unbelief, their works
will bear no fruit in this life and in the Hereafter; they will be
Companions of the Fire and will abide therein.
Al-Baqara ayah 217
Shirk, and also Kufir, is the top sin because they are unforgivable:
إِنَّ اللَّهَ لَا يَغْفِرُ أَنْ يُشْرَكَ بِهِ وَيَغْفِرُ مَا دُونَ
ذَٰلِكَ لِمَنْ يَشَاءُ ۚ وَمَنْ يُشْرِكْ بِاللَّهِ فَقَدِ افْتَرَىٰ
إِثْمًا عَظِيمًا
Allah forgiveth not that partners should be set up with him; but He
forgiveth anything, else to whom He pleaseth; to set up partners with
Allah is to devise a sin most heinous indeed.
An-Nisa ayah 48
Many people misunderstand these ayahs because they read them out of their context. The Fitnah in this ayah means Fitnah in the religion, by either Kufr or Shirk.
Having Fitnah in the religion is worst than getting killed, because the end result of Kufr and Shirk is the Hell, but getting killed for keeping or protecting your religion is absolutely way less worst.
As far as the child story, you can read it in Surah Al-Kahf, its a story so I cannot copy the whole ayahs.