Mange mites are a good bet here, so have your vet take a skin scraping and examine it under the microscope. Mange mites suck the blood out of hair follicles, which causes the hair to fall out. The awful smell means there is a secondary skin infection in the follicles that will need antibiotics to treat. Bottom line, it's time to see your vet.
This is true. The vet would be the best person to ask. We have had a few dogs come into the groom shop that look like that. Mange mites or yeast is usually what we learn it is.