J.M.
Wash her hair less often... Washing it makes the oil glands over-produce, which makes the problem worse. She only needs her hair washed twice a week or so...
I used to use a soft toothbrush to flake it off (after doing the baby oil thing...) It helped a lot.
If you need to, you can use a *tiny* bit of head and shoulders when you do wash her hair, but be VERY careful NOT to get it in her eyes!!!
My DD had cradle cap bad enough that she actually got a rash down her neck and back, and she had to have a steroid cream to clear it up... The glands in her scalp simply over-produced the oil. Her pediatrician made the above suggestions to me, and they worked well.