This does sound a lot like Mange, to me. Does it smell 'mousy'? My dog got that once, caught from wild foxes on our country walks. It was solved quickly from skin scrapings, and treated with one shot. It does take a while for the scabs to heal afterwards, so the vet should give you some healing cream to keep the skin supple. Then it takes a while for the hair to grow back.
I think there's more going on, too. The sores and scabs can be from flea bites, yeast, or bacterial infections such as Staph. The flaking can be from any of these, but the "Weird Smell" points towards "Mange". Although some Yeast infections have an Odd odor, Mange has such an unusual smell that it's hard to forget. Your dog needs to have a skin scraping done, to determine which of these things to treat. If it's a bacterial infection, the culture should be sent out to a lab to determine which antibiotic to use. Sometimes Mange mites do not show up on the skin scraping, but it's best to treat for it just from the clinical signs. I think you need to find another vet that is willing to help you and your dog. What may have started out as flea bites has turned into something more...Your right! Don't give up.....All of these disorders can be resolved.....Good luck and let me know what you find out....Karla