My son had the same thing as an infant. He also had allergies to just about everything by the time he was 5yrs old. I had him allergy tested. The dry skin stopped when he hit puberty at age 11...then his skin was too oily. follow what the doctor told you.
Could be allergic to something , what about his undervest is it cotton tr a mix of fibres ,also what laundry detergent are you using,is it itchy does he scratch the area on his chest ?
My son had the same thing last year wehn it got cold last year .. It turned out that he was getting to hot in the car and was breaking out bc of all the sweating .. WE also had to keep his skin moisturized but we had to just keep blankets on him instead of putting coats/winter items on him in the car. It took a while for it to clear up though. He still sporatically gets rashes too.
My 13 month old son has been experiencing a severe rash all over his entire body. We learned that he has a skin infection, impetigo. This needs to be treated with antibiotics-Bactrim or Cephalix and more importantly, Bactroban, or the generic munipirocin. He's been in torment scratching terribly night and day. Neither one of us sleeps very well as I am constantly applying Aquafor generic to his skin all thru the night as well as thru the day. The dr. also recommended bleach baths, 1/4 cup of bleach for 1/4 of the tub for a lil guy like him. I've heard this works well. Although initially he could not handle water on his skin-it was so incredibly inflamed and broken. So I let the bactroban heal up his skin first then we tried the bleach baths, for head to toe. Topical colloidal silver also helped with the itching-not to be taken internally. We are still in this battle, not having a dr. to consistently monitor his situation...going to a dermatology clinic with a grab brag of drs is NOT recommended. But I am finding that this regimine is starting to pay off and my son is starting to have better days, being a happy, laughing baby again. I hope that your child has not had to suffer in every sense of the word like mine has and that you have found a solution.