It's common in kids.
As a child me and all the other kids had that too. I know it's hard with a baby... but it can itch, and if scratched can get spread.
For us, I had a prescription creme for it, when I was a child.
Yes, there are many different kinds of anti-fungal creams with different "active" ingredients. My Pediatrician recommended Clotrimazole (which is also in yeast infection creams over the counter for women). But there are different kinds.. use the one which you know has the least side effects... being your baby is so young. There are also the anti-fungal creams which are used for 'athlete's foot" and "jock-itch." It's all different variations of "anti-fungal" purposes.
As your Pediatrician for an alternative.
You could also try diluted "Tea Tree" oil. On a baby's delicate skin... you would not want to use it full strength. But again, ask your Pediatrician about it. Or ask him/her of any homeopathic remedies available.
Any kind of "fungus" can spread, and can be hard to get rid
of. It can also be transfered from pet to human, or human to pet. My Dad once got ring worm from our dog. But the vet said HE probably gave it to our dog. LOL.
Here is a link for info.:
http://www.google.com/search?q=how+to+get+rid+of+ringworm...
take care,
Susan