Hi J.,
I'm not sure what the chronic rash is, but you are on the right track seeing a dermatologist. You have to be persistent and continue to follow up with your dermatologist. If you are not satisfied with this doctor then find another. If the rash persists despite following the doctor's advice, ask for a referral to an endocrinologist or even a rheumatologist they may be able to offer some good suggestions.
Sometimes getting a diagnosis is like solving a mystery and most primary care doc's aren't going to be aggressive in trying to find a solution, so you are going to have to be your own "general conttractor" if you know what I mean.
The skin will become darker in the area of the chronic rash simply because of the overactivity of skin cells in the area constantly trying to heal the rash. The excessive hair growth, if it is limited to the affected area may be related to the creams you are using.
As far as the swollen lymph nodes, it would seem the rash is either itchy or your son is simply a "picker" who can't leave the scabs alone. The lymph nodes occur because of the rash, not the other way around. Whenever there is an inflamation or broken skin, the lymph nodes in that general area can become inflamed. This is a result of the immune system. If you notice swollen lymph nodes in other areas that are not affected by the rash then I would be more concerned. When the rash resolves, eventually so will the swollen lymph nodes. Though they can persist for a month or two.
As always, be sure to get expert medical advice. Mamasource is a great resource, but no substitution for expert advice.
J. L.