Here are two different definitions of the Hopf algebra structure. As you write it is easier One needs to work in the ring $\Lambda$ of symmetric functions in infinitely many variables but it should not be a problem working only in finitely many variables. This would correspond to looking at generators only up to a certain degree, but the expressions below only use elements of lower degree anywayas you indicate.
where a representation of $S_i \times S_j$ defines an element in $\Lambda \otimes \Lambda$ in the natural way.The connection between symmetric functions and representations of $S_n$ is as follows. The graded piece $\Lambda^n$ is isomorphic to the ring of virtual representations of $S_n$ via the so called characteristic map. A virtual representation $V$ is mapped to the symmetric function$$ \mathrm{ch}(V) = \frac 1 {n!} \sum_{\sigma \in S_n} \mathrm{Tr}\left(\sigma \mid V\right) \psi(\sigma) $$$$ \psi(\sigma) = \prod_{(i_1\cdots i_k) \text{ a cycle in } \sigma} p_k. $$This is in fact an isometry relative to the usual inner product on symmetric functions, and the natural inner product on representations for which irreducible representations form an orthonormal basis. The representation associated to the Young diagram $\lambda$ corresponds to the Schur function $s_\lambda$, so equivalently $$\langle s_\lambda, s_\mu \rangle = \delta_{\lambda \mu}.$$
A more direct definition of the coproduct is in terms of power sums. Define a coproduct via

