7 mos old had fever 104, WBC 25000, normal urinalysis but positive urine culture. Is this likely a kidney infection? Did this cause kidney scarring?

Maybe. The pediatrician seeing this 7 m.O. Baby knows best. Depending on the organism cultured and the manner in which the culture was obtained, this may be pyelonephritis, but could also be systemic infection with bacteria in the blood creating urinary tract infection secondarily. The nature of the organism, duration of the infection and the manner in which it was treated will determine damages.
Kidney infection. Yes, this is definitely a kidney infection called pyelonephritis, most common in girls. Any infection can produce scarring of tissue but don't despair because close monitoring for UTI from now on should help prevent more infections. After finishing the antibiotics, the current standard is to do an ultrasound of the kidneys, ureters and bladder to identify any obstruction and treated if found.