Ugh. So, DD developed excema at around 8 weeks. Doc told us to use .5 percent hydrocortisone cream for two weeks. Did NOTHING. Went back to doc, got prescription for 2.5 percent cream and it worked for like, two days. We also switched to Dreft at this point. I'm literally washing everything in the house in Dreft now and she still has excema. She also has cradle cap, and scratches her head and legs all day long. She also has reflux. 
Pedi hasn't mentioned it yet, but I'm thinking it's allergies, I just don't know what she's allergic to. I've heard of folks getting rid of cradle cap by giving up dairy, but if it was dairy wouldn't she have diarrhea or mucousy poops? Oy...she has her four month checkup next week so I'll ask her pedi the, but I was wondering what y'all think.                 
                             
        
Re: The endless excema battle
I agree with PP who said ditch the Dreft. You definitely need something that's fragarence free.
I do think that excema is often a physical manifestation of food sensitivities. I know that some people don't necessarily believe that this is true. I would see if you can isolate the issue. JMO. I don't have a LO with excema, but if I did I would be looking at what they might be sensitive to.
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We have a steroid cream that we use on the spots. For the cradle cap, about 5-10 minutes before the bath, we rub baby oil on DS's head. Then we bathe using Cetaphil on body and head. While he has the Cetaphil in his hair I use a comb to loosen and release the flakes. Then within the first 3-5 minutes out of the bath, we put cream on his excema, the cover his whole body (head to foot) in Aquaphor (actually we use the CVS brand, but it is the same thing).
We bathe every day. Cradle cap started clearing almost immediately. Excema is a bit harder to get rid of, but we are using the cream as directed and it is clearing things up nicely. You just have to be religious about moisturizing the body every time you change a diaper. Keeping the skin moisturized really helps combat the excema.