Thinking about why Cove had such a hard time getting along with Baxter besides the obvious "he's too direct and flirty and talks funny" thing. Honestly, I think it's that Cove can't get a read on Baxter, and that makes him uncomfortable.
Cove has always been blunt, and even though he's developed more tact as he's grown up, he still values honesty and being genuine as some of the most important things when it comes to people. That's why he vibes so well with MC after all; they've known each other since they were young and MC is always real with him, so he knows he can be real with them too.
Terry and Miranda also fit well with this. Miranda has always been genuine but she's also shy so it might've been difficult for her and Cove to connect, but Terry and his bombastic self helped bring them together. Yeah, Terry is loud and extroverted and a little cooky (I say affectionately bc we stan Terry in this house), but he's real. All those quirks he has are just a part of him, and Cove can see that.
So when Baxter shows up, perfect and cheerful and poised like he doesn't have a care in the world, Cove feels something off. We know that the Baxter Cove first meets is a Baxter that has curated his own image, erasing all of his own flaws and ignoring the parts that make him him. He doesn't let people know what he's really feeling, instead choosing to present someone laid-back and happy about everything. Of course, Cove doesn't know this, but I think he can sense it subconsciously. This black-and-white man he's talking to is putting up a front, and Cove doesn't like that he can't see past it.
And you know what? He is so valid in that.
But I also think that's why he starts to warm up to Baxter in step 4. In the wedding dlc at the end of the reception, he initiates a hug and asks if they're friends, to which Baxter accepts and that makes Cove happy. And in Baxter's dlc, after he apologizes to everyone after the Adams' wedding, Cove smiles and is perfectly willing to start over. 18-year-old Cove would never do any of that for 19-year-old Baxter unless absolutely forced to.
And I think that change has less to do with Cove (though I'm sure his growth helped a little) and more to do with Baxter. In each of those instances, Baxter shows his real self, shows his real emotions, lets himself be vulnerable. The facade is gone, and Cove appreciates that Baxter is finally being genuine.