It may just be chafing, or perhaps mild eczema. Fungus or yeast are possible, but much less likely. My advice is to keep the area dry, to apply an over-the-counter anti-fungus/yeast cream like clotrimazole 1% twice a day, and to see a doctor if the condition persists for more than 2 weeks. You may need a prescription-strength anti-inflammation cream, perhaps one containing hydrocortisone.
Take care.
Dr. Rockoff
I am the guy right below you on the list of topics and it sounds like the same thing I have. I went to the doctor and he is pretty sure it is folliculitos which is infected hair follicols(sp). Obviously, you want to hear the doctors answer, but I know how stressed I was and thought I would throw a little reassurance your way.
I've been diagnosed with folloctilitus from my doctor a year ago when I became concerned w/ pimple like pustules surrounding the base of my penis. They were present for 2 months until the doctor advised me to purchase antibacterial soap and neosporin, I noticed results in matter of weeks, and they went away. I wouldn't fear herpes, it's probably inflamed hair follicles.