we have dry skin too... dove was the only thing that would help, plus hydro cortisone cream with aquaphore. for scalp, we use head and shoulders for when it gets bad. if it's not, we use water, dove, or aveeno.. whatever we have on hand.
our cradle cap was AWFUL in the beginning, went away.. and now at 7 months, i see a little of it coming back again. head and shoulders really works well for us... but please keep it out of their eyes... mine's screamed a few times :(