I've never had much success treating my dogs' skin conditions externally. I have however cleared up a variety of skin issues...flakiness, bald spots, scratching, hot spots...simply with dietary changes. Grainless kibble and Omega oils are highest on the list of those changes. I have a really good oil that I add to their kibble and it's done wonders for their coats and overall health. My vet said it's one of the best on the market...Ultra Oil Skin and Coat.
It's not cheap, but you don't need much for dogs as tiny as ours.