I'm starting to feel like I work for this company. My cat has similar sounding skin problems, and it's really clearing up since I've been using Septiderm-V shampoo. I got it at Petco, but you can look it up at www.naturvet.com and click on the Green Tree products link.
You can also start adding cod-liver oil to your cats food, just a small amount to begin with, but work it up to about a half a tsp a day. It will help to condition the coat and also help with hairballs.