I told him he would have belong to a parish, his wife would not have to convert,
She would not necessarily have to convert. However, one or both of them would have to resume or undertake the active practice of the Catholic faith.
Can. 868 §1. For an infant to be baptized licitly:
1/ the parents or at least one of them or the person who legitimately takes their place must consent;
2/ there must be a founded hope that the infant will be brought up in the Catholic religion; if such hope is altogether lacking, the baptism is to be delayed according to the prescripts of particular law after the parents have been advised about the reason.
at least one God Parent would need to be Catholic,
Only Catholics can be godparents to Catholic children.
A non-Catholic can stand, together with a Catholic sponsor, as a Christian Witness to the baptism. But they are not themselves the sponsor (a.k.a. godparent).
Can. 872 Insofar as possible, a person to be baptized is to be given a sponsor who assists an adult in Christian initiation or together with the parents presents an infant for baptism. A sponsor also helps the baptized person to lead a Christian life in keeping with baptism and to fulfill faithfully the obligations inherent in it.
Can. 873 There is to be only one male sponsor or one female sponsor or one of each.
Can. 874 §1. To be permitted to take on the function of sponsor a person must:
1/ be designated by the one to be baptized, by the parents or the person who takes their place, or in their absence by the pastor or minister and have the aptitude and intention of fulfilling this function;
2/ have completed the sixteenth year of age, unless the diocesan bishop has established another age, or the pastor or minister has granted an exception for a just cause;
3/ be a Catholic who has been confirmed and has already received the most holy sacrament of the Eucharist and who leads a life of faith in keeping with the function to be taken on;
4/ not be bound by any canonical penalty legitimately imposed or declared;
5/ not be the father or mother of the one to be baptized.
§2. A baptized person who belongs to a non-Catholic ecclesial community is not to participate except together with a Catholic sponsor and then only as a witness of the baptism.
and they’d have to go to a couple of pre-baptism classes.
The requirements for sacramental preparation vary from diocese to diocese. You should really make not statement on this, unless you know the requirements at his particular parish. The first of course will be that they begin attending that parish and meet with the pastor.
For example, would they need to get their marriage convalidated first?
Maybe. While not a canonical requirement, there must be (as stated in canons above) a well founded hope that the child will be raised Catholic. An atheist, non practicing Catholic who married outside the Church and his Lutheran bride do not say “well founded hope” to me. So, the priest may want them to demonstrate, with concrete actions, their commitment to returning to or assuming the real practice of the faith.