This is the little Spanish Song the kids are singing. Ian learned it at school and now they are all singing it, with some variation in that they don't speak Spanish!! I found these words for it online.
Don Alfredo baila.
Don Alfredo baila, baila, baila, baila
Don Alfredo baila, baila, con el dedo [1]
con el dedo, dedo, dedo [1]
asi baila Don Alfredo.
[1] mano, brazo, pecho .
Translation:
Don Alfredo dances, dances, dances, dances,
Don Alfredo dances, dances with his finger*, with his
Finger, finger, finger, that's how Don Alfredo dances.
*hand, arm, chest
[*] Music and lyrics by Music Together (Sticks)
Here's a video of it:
http://www.youtube.com/watch?v=vaH7m2Tvsdg&feature=youtube_gdata_player