At the hospital 2 newborns get swapped, one Jewish for one not. 20 yrs later someone realizes what happened & informs both kids of the mistake, does their status change? Does the ‘non Jewish’ boy who was raised to be a proud observant Jew need to officially convert now? And would the Jewish boy raised ‘non Jewish’ have to convert to Judaism now or was he always considered Jewish?
According to Jewish law, a person is only considered part of the Jewish people, if they were born to a Jewish woman, or they formally converted to Judaism.
Also according to Jewish law, a person who was born Jewish, but was raised secular, as a non-Jew, is still considered to be a Jew, even if he wasn't even circumcised.
So in the hypothetical case of the OP, assuming that it was unequivocally proven that in fact they babies were switched, then the Jewish boy raised ‘non Jewish’ does NOT need to convert to Judaism, since he was he always Jewish. His "Jewishness" was conveyed to him by his biological mother.
On the other hand, the boy born from a non-Jewish woman, never had any "Jewishness" formally conveyed to him. The fact that he observed Jewish laws and customs is immaterial, since as a biological non-Jew, he requires a formal conversion process, which he never underwent.
The gemara in Gittin 42b discusses whether a slave owned by a Cohen that has been freed, but has not been given a formal document of freedom (גט שחרור) can still eat Terumah. The gemara attempts to bring a proof that he may eat Terumah from the following Mishna (Yevamos 99a):
כהנת שנתערב ולדה בולד שפחתה הרי אלו אוכלין בתרומה וחולקין חלק אחד על הגורן הגדילו התערובות משחררין זה את זה
If the wife of a Cohen mixes up her child with her maidservants' child, the 2 children may eat Terumah, and collect a portion of Terumah (together). When they grow up they both free each other.
The implication is that the slave is effectively considered "freed" since you cannot work them since they may be Jewish, yet they were not formally freed with a גט שחרור and the Mishna says that they may eat Terumah.
The gemara rejects this proof:
הכי השתא התם אם יבא אליהו ויאמר בחד מינייהו דעבד הוא קנין כספו קרינא ביה
That case is different because If Eliyahu Hanavi would come and identify which one is a slave, they would indeed revert back to being in the possession of their owner.
From here It seems clear that even a child who was raised as Jewish, but Eliyahu Hanavi revealed that they are not, they would indeed have the status of a non-Jew.