I would also recommend finding out if it's fungal, especially for such a little one. Then I would recommend an ointment with coconut oil (naturally antifungal) like CJ's Butter (google it, will find at CJ's sewing room; love the Lullabye fragrance). It's all natural. Here are reviews on diaper ointments:
http://www.diaperpin.com/diapers/
itemlist.asp?subcat=DIAPERCARE (add this to end of link)
The only ingredients in original BUTTer are shea butter, olive oil, coconut oil, lanolin, beeswax, cocoa butter(deodorized, not raw) and Vitamin E. I also keep some without lanolin on hand for a couple customers who have sensitivities to lanolin, and you’re welcome to that as well. The Stick o’ BUTTer has the same ingredients, except there is no lanolin. Fragrance or essential oils are only added if you choose to have it scented. For our yeast fighting formula, we exclude lanolin and add sesame and neem oils.
Have you considered cloth diapering? CJ's Butter is cloth diaper safe too. I love cloth and cloth diapered babies do not have rashes as often. Less stinky too; you would need 2 XL waterproof wetbags. The diapers and cloth wipes, if you use them, all go into the bag, unzip, put in washer. The dipes will come out of the wetbag by themselves. So easy. I love my GroVia AI2's, which are hybrids. The most popular brands, from my observation, seem to be GroVia, Fuzzibunz, and BumGenius. GroVia and BumGenius have hybrids, meaning you can use cloth (Grovia's snap in) or biodegradable inserts which are great for out of the house though many use them in house too. BumGenius Flip's are hybrids as well. A few websites will let you trial them inexpensively, ie. you put down a deposit for their price and if you don't like them, return them, and it is credited back other than $10-20. www.nickisdiapers.com is one site that does this. These will seem bulky at first on a newborn, I personally bought cloth newborn dipes, but many did start right off with them.
Best of luck with the rash :)