I have picked up plenty of stitches on the fronts of baby sweaters and done K1, P1 ribbing, but I have never lined them with grosgrain ribbon. I have never found it necessary. I'm not saying it wouldn't be a good idea if that is what you really want to do, I'm just saying I have made a lot of sweaters and seen a lot of patterns and they are not not used, or really needed.
That said, I can't really be of any help on how to do this. I looked in several of my knitting books and no one addresses this issue. Sorry I can't be of more help. I know they used to do this on some sweaters (store bought, and probably hand made), and may still do it but I haven't seen it done.