I disagree with you and sammiam...Kayden is just learning about friendship and trust and has had no other basis of what is appropriate or not appropriate. Damien should have realized that Kayden wouldn't do anything to betray him. Almost everyone who has ever dealt with Kayden has betrayed him in one sense or another. I don't think Kayden has a bone of betrayal in his little body.
How would Kayden know that his "relationship" with Finn was causing problems? Apparently no one else saw anything that was amiss. Kayden doesn't, at least to me, have a good idea of boundaries at this point. Damien does and instead of being upset and angry, he should have been teaching Kayden. This is 99% Damien's fault and 1% Kayden's fault, in my humble opinion.