Hi, Welcome and thanks for posting your query to Healthcare Magic. After reading your query it appears the best possibility appears to be Seborrhea capitis or a case of moderate to high Pityriasis capitis . The scalp skin secrets oil continuously and the secretions of oil glands are deposited on the local area. These secretions itself leads to subsequent blockage of the glands and so leads to mild inflammation of the area. There after the continuous secretion and the mild inflammation leads to yellowish dry crusting of the area. So it leads to the kind of appearance which is like cradle cap. -you should make the best thing that your kid is not touching, pinching, poping or squeezing the area by any means -Wash her scalp daily if she do not have long hair or if long hair are present then can do alternate days. - Maintain scalp hygiene. DO not apply any hair oil or any home remedies as can irritate the skin. Apply a cream containing Fluticasone with mupirocin on it for two times a day. You can apply two times a day in such a thin layer that it should be visible by naked eye. Do not apply beyond 7 days of period. She will be alright by your tender and gentle care, be positive and enthusiastic towards her recovery. Hope these information will help. With good health wishes Dr Sanjay Kumar Kanodia MD (Dermatology & STDs)