Hi Sara,
If you're still using Baby Shampoo and your daughter has hair it will dry out her scalp.
We use "Circle of Friends" shampoo and conditioner for my 2 and 3 year old and it almost immediately solved the dry skin problem for both of my kids when we began using it. We bought it at Cool Cuts 4 Kids in Orland Park. The hair stylist told us how the Baby Shampoo really dries out kids' scalps if it is used in toddlerhood. My husband thought she was just trying to peddle her shampoo products, but I'm so glad we bought it!!
Good luck!!