In the old edition (the new one was just released within about the last month) of the IVP Bible Background Commentary, New Testament volume, Craig Keener provides the following info:
Mark 1:4-5 Like many other ancient peoples, Jewish people practiced ceremonial washings. Their only once-for-all ceremonial washing, however, was the immersion that non-Jews had to go through when they converted to Judaism. Non-Jews who were converting to Judaism would immerse themselves in water, probably under the supervision of a religious expert. Johns baptizing activity fits this model.
Jewish people also practiced repentance when they did something wrong, asking Gods forgiveness and determining to change. (The Old Testament prophets often used this Hebrew idea of turning from sin; it involves more than just a change of mind, which is the literal sense of the Greek term used here.) But the ultimate example of repenting, or turning from a wrong way of living to a right way of living, was when a non-Jew decided to obey the teachings of Israels God.
To tell Jewish people that they had to be baptized or repent the same way non-Jews did would have been offensive, because it challenged the prevalent Jewish belief about salvation. Most Jewish people thought that if they were born into a Jewish family and did not reject Gods law, they would be saved; John told them instead that they had to come to God the same way that non-Jews did. The point of Johns baptism is that everyone has to come to God on the same terms.
John 1:2425. Of the many kinds of ceremonial washings in Jesus day, the most significant once-for-all kind of washing was proselyte 1 baptism. Gentiles were usually baptized when they converted to Judaism; this was widely known and even mentioned by the Greek philosopher Epictetus 2. By reporting that John asks Jews to be baptized in an act of conversion, the Gospel writers declare that John treats Jews as if they are pagans, which was unheard-of (see comment on 3:35). The Fourth Gospel often contrasts water rituals and the Spirit
John 3
3:34. Jesus speaks literally of being born from above, which means from God (above was a Jewish circumlocution, or roundabout expression, for God). One could also construe the phrase as meaning reborn, which Nicodemus takes literally. (Ancient writers, including those of the Old Testament Jer 1:1112; Mic 1:1015 often used plays on words, and John includes quite a few other puns; they also sometimes used other characters as less intelligent foils for a narratives main spokesperson.) Because Jewish teachers spoke of Gentile converts to Judaism as starting life anew like newborn children (just as adopted sons under Roman law relinquished all legal status in their former family when they became part of a new one), Nicodemus should have understood that Jesus meant conversion; but it never occurs to him that someone Jewish would need to convert to the true faith of Israel.
3:5. Converts to Judaism were said to become as newborn children when they were baptized to remove Gentile impurity. Born of water thus clarifies for Nicodemus that born from above means conversion, not a second physical birth.
The Greek wording of 3:5 can mean either water and the Spirit or water, that is, the Spirit. Ezekiel 36:2427 used water symbolically for the cleansing of the Spirit (cf. especially the Dead Sea Scrolls), so here Jesus could mean converted by the Spirit (cf. 7:3739)a spiritual proselyte baptism. Whereas Jewish teachers generally spoke of converts to Judaism as newborn only in the sense that they were legally severed from old relationships, an actual rebirth by the Spirit would produce a new heart (Ezek 36:26).
Summarizing:
1) Baptism in water was not something invented by Jesus' cousin John. It was an existing Jewish practice.
2) Water baptism was an initiation practice for new converts to Judaism, but John required it even of those who were already Jews but were not living accordingly.
3) The terminology of being "born again" was not invented by Jesus in his discussion with Nicodemus. Similar language was already in use in regard to those newly baptized into Judaism.
The expression "baptize in/with the (Holy) Spirit" occurs 7 places in Scripture:
-- Matt. 3
-- Mark 1
-- Luke 3
-- John 1
-- Acts 1
-- Acts 11 (talking about events in Acts 1, 2, and 10)
-- 1 Cor. 12:13
It is probably also alluded to in John 3.
In all the Gospel accounts, baptism in the Spirit is presented as a replacement for John's water baptism. It is therefore an initiation/conversion event. Specifically, it is initiation into the group that is freed from sin and judgment. Matt. 3 and Luke 3 present two groups -- those immersed in the Spirit, and those immersed in the consuming fire. John shows John the baptizer linking baptism in the Spirit to the Lamb of God "who takes away the sins of the world."
In 1 Cor. 12:13, Paul uses "baptized in the Spirit" and "made to drink of the Spirit" as parallel terms, and both denote the event that places us into the "body" of Christ; so again it is initiation/conversion language. (It is also notable that the context of ch.12-14 suggests that being initiated into the body by immersion in / imbibing of the Spirit brings with it the ability to operate in various gifts and powers provided "as the Spirit wills.")
Acts 1-2 constitutes a possible exception to the pattern. The implication of John 20:22 is that the disciples at that point were given new life by the Spirit. (C.f. John 3; 4:10-11; 7:38-39.) If so, and if we take John and Acts as both being accurate historical records, then in this case baptism in the Spirit and conversion/rebirth are separate. In that case, it appears Luke is still using it as "initiation" language, but here it is initiation into what some call "the prophethood of all believers," the empowering of the Spirit all believers are to receive. (On a possibly contrary note, observe that John 20 linked the authority to act as God's representatives and forgive sins. If so, John pictures them as already initiated into the "prophethood" weeks before Acts 2.)
Acts 10-11 are hard to analyze. Luke explicitly links it to Acts 1-2, but taking the text at face value, the prophetic Spirit falls before the audience has even had a chance to fully hear and appreciate the Gospel.
The bottom line is that anyone who has been born of God has been baptized in the Spirit in the usual sense in which that expression occurs in Scripture, and is part of the body of Christ. Anyone who is part of the body of Christ is part of the "prophethood of all believers"; there may or may not be some separate empowering event where this becomes more obvious.