Your suggestion is wrong. Beim schreien does not translate to by (the crying of) the baby but rather to by crying. So your suggestion would mean:
I was awoken at 3 a.m. by crying of the baby …
That is just a great mess of weirdness. Immediately, the suggestion to correct it pops to my mind:
Ich wurde um 3 (Uhr) in der Früh beim Schreien nach dem Baby geweckt …
This ‘correction’ sounds closest to what I would expect with beim schreien; however, it means by crying at the baby. So we have the paradox that it was you crying at the baby that woke you up … you see how this is just getting more terrible by the minute?
I assume that your inital assumption was something along the lines of ‘bei is a preposition, too, isn’t it? Can’t I add it to that noun there?’ Yes, we can possible think of grammatical ways to use bei with a noun in the context of waking up, but in that case it would be the place where you woke up.
Ich wurde um 3 in der Früh beim Brunnen (vom Nachtwächter) geweckt …
Note that the original construction is passive voice using a by-agent in English to denote the active agent. In German, the active agent is denoted by von in the passive voice.
Furthermore, I wish to restate, that picking up a baby would be much better translated as hochheben or hochnehmen rather than aufheben. Aufheben is something you do to things that fell, usually on the ground. We don’t want our baby falling, do we?