I never thought of that as a skin condition, my son is 2 1/2 and had the same thing when he was younger. Actually, at lunch today, all around his mouth got really red and it looked like a reaction to soemthing, but we had no idea what it was. I noticed when he had the rash all the time around his mouth, he also had a pacifier, and that seemed to make it worse. Does your son use a pacifier? I switched to a different kind that did not touch his mouth so much, but it didn't seem to help. I also tried vaseline and stuff, but that didn't help either. It eventually got better as he got older, getting off of bottles seemed to help too (i think because he gets less milk around his mouth with a sippy cup). He was around 12 months-18 months when he had the problem, but by 18 months it seemed to be going away. Have you tried poop goop? Ask your dr for a prescription for that, if it is a yeast infection that is the only thing like that that would help. Otherwise, you could try monistat cream or something too. I have known of babies that drooled a lot and got a yeast infection in their neck, and the dr gave them poop goop to get rid of it. I was also a nanny for a little girl who was given that for a diaper rash that developed into a yeast infection. My son got a HORRIBLE yeast infection at 9 months after being on an antibiotic. I thought it was just a regular diaper rash, and was putting vaseline and desitin on it, and within a day it was REALLY bad! I had to bring him to the dr, and they told me that all that stuff does is seal in the yeast, and cause it to get worse instead of better, so that caused it to get a lot worse. He ended up with a prescription yeast medicine because of how bad it was (actually bleeding), but poop goop can usually help it heal without sealing it in too. THey also told me that a talc-based baby powder rubbed on can help protect it from getting irritated too. I don't know if it is possible that your son has a yeast infection around his mouth, but I don't think it would hurt to try treating it and see if it helps. Your dr could tell you if it is though. If it isn't getting better, I would ask the dr. Good luck! I hope he gets better soon!
J.