CO does indeed stand for Commanding Officer, not Commissioned Officer. Why we do it differently than the Army I am not sure but I suspect that in our early days, while trying to set ourselves apart from the RFC and RNAS somebody wrote a letter and had a grammar attack which has stuck.
"Officer Commanding 617 Sqn" is better English than "Commanding Officer 617 Sqn" and while working at an Army-led unit I steadfastly refused to change my signature block; much to the annoyance of my green friends.
Colloquially, we refer to the Stn Cdr as the CO but his correct title is most often "Officer Commanding RAF Wherever". Of course, that is changing as Stn Cdrs are re-badged "Force Commanders" so I think the Army will eventually have the last laugh.
Oh, and TBT: The correct abbreviation for Officer In Charge is "OIC", not "O i/c". Well if you're going to be pedantic . . . .