Dr. Muzammil H. Siddiqi, former President of the Islamic Society of North America, states: “The word “holy” means sacred, consecrated, coming from Allah or belonging to Allah, or set apart from others and distinct. The Arabic equivalent of this word is “muqaddas” or “aqdas“. In the Qur’an, one of the names of Allah is “al-Quddus” (The Supreme Divine) (al-Hashr 59: 23; al-Jumu’ah 62: 1). The angel Jibril, peace be upon him, is also called “Ruh al-Qudus” (the Spirit of Holiness, see al-Baqarah 2:30, 87, 253, al-Ma’idah 5:110, al-Nahl 16:102) The valley where Prophet Musa (Moses), peace be upon him, received divine revelation is called “al-Wadi al-Muqaddas” (the Sacred Valley, TaHa 20:12, an-Nazi`at 79: 16) and the land of Palestine is given the title “al-Ard al-Muqaddasah” (the Sacred land, al- Ma’idah 5:21).
Thus I do not see anything wrong in using this word for the Prophets of Allah. In Urdu we do use the term “nufus qudsiyah” for the Prophets and Messengers of Allah. In Arabic it is common to use the word “al-Kutub al-Muqaddasah” for the Sacred Scriptures. Generally, English-speaking Muslims use the term “Holy Prophet” for Prophet Muhammad, peace and blessings be upon him. However, this term is not exclusively for him. It can be used for other Prophets and Messengers of Allah.
As far your second question whether Allah made the world because of Prophet Muhammad, this statement is used by Muslim poets and some Sufi writers. To my knowledge, it is not based on any statement of the Qur’an or authentic Hadith. There is a Hadith Qudsi often quoted by some Muslim writers, which says, “Laulaka lama khalaqtu al-aflaka.” (Allah said to Prophet Muhammad, “Had it not been for you, I would not have created the planets.”). According to the scholars of Hadith this is not an authentic Hadith. If it were an authentic Hadith, we should have no problem in accepting it, but we ourselves should not make such statements.”