I think you need to get straight to the vet and get a skin scraping. It sounds like whatever it started out as may have become infected and spread. You'll also want to check for mites or other microscopic things. The vet may put him on a short course of prednisone to settle it down. In the meantime you can give him an antihistamine for the itching - my female gets 2.5mg Phenergan for her contact allergy.
You should also get his thyroid checked.
Don't use any human shampoos on his skin - humans have more acidic skin than dogs (who have a neutral pH) so it would be like pouring acid on him. A nappy cream may help in the interim, but definitely get some cortisone cream or spray from the vet, something like Neocort or Cortavance. To hydrate his skin try rubbing baby oil on the skin. The vet dermatologist recommended putting some QV or Ego bath oil in a spray bottle and spraying every day, if you're in the US you won't have QV, but it's a special dermatogical product that is water dispersible (free of petroleum products, perfumes, lanolin), you've probably got a similar brand where you live. I actually use an oil from Plush Puppy called Sea Breeze oil, specially designed for dogs and it works great.
I've been through a similar issue with Deska over the last couple of years and have seen a dermatologist with still no knowing what it is, although we're pretty sure it's not a contact allergy. Usually a dog will lick its paws and have raw feet if it's contact allergy. If you rule out mite type things and thyroid you'll need to try an elimination diet. It needs to be a protein source that your dog hasn't had before and you do it for 3 months to see if there is an improvement. You have to stick really closely to it. There are prescription diets for this, and if you feed kibble it's the easiest way to do it. Deska was on fish and potato - I cooked one meal and gave kibble for the other. He did do well on it, although lost a little weight. The new dermatologist wants me to do it again, but because my dogs get a variety of food, she wants me to try rabbit/goat and pumpkin (blah).
Also, I suggest you flea bomb your home, wash all your dog's bedding in a gentle, liquid detergent (powder laundry detergents tend to cling and leave residual) and if he is spending time in the yard you should spray your yard.
Anyway, lots of info there, like I said, I've been through this process with Deska and I know how awful it is when they're itchy, and how yucky it looks.