The dips are highly toxic. Your vet should be telling you this.
The following can be a direct result of the dips.
"Convulsions, ataxia, hyper-excitability, personality change, hypothermia, appetite stimulation,
bloat, polyuria, vomiting, diarrhea, anorexia, edema,
erythema and other varying degrees of skin irritation. Three fatalities were recorded." **This info taken from from 1998.
Please think long and hard before utilizing this method of treatment no matter what others may do.
At one point in time this product was pulled from the shelves. If memory serves me right it was 2002-2003 (don't quote me on the year). The following link will take you to the package insert information from Pfizer with additional info about clinical studies. At least read it if you are considering this route.
http://www.pfizerah.com/PAHimages/compliance_pdfs/US_EN_MI_compliance.pdf
The pictures seem to show what might be considered a secondary skin infection usually brought on by itching the affected areas. This is pretty normal and vets will prescribe an antibiotic to help with that.
You need to discontinue the shampoo (ask your vet to verify). The Sulf Oxydex should not be applied to open skin (which is what your pup has now). That shampoo will not kill the mites and is best served to use after to encourage new hair growth. It WILL get worse before it gets better. The Goodwinoil is 50/50. It might help and then again you have just as much chance that it won't. You have to apply the ointment on a larger area than you think is needed. For example....if you were seeing any hair loss you would apply it to that area as well as twice that amount away from the balding spot. Since you are not seeing any hair loss you need to use it on other affected areas and still create a larger border around that to ensure you are encompassing it.