My husband has something like this and also hasn't had any luck with OTC remedies so went to see his doctor. The problem (as several others have mentioned) was that once the fungus is in the nailbed, you need to take an oral antifungal medication, and it's actually pretty hard on your liver. About 10 years ago, he took it and got rid of the fungus. But he has it again now, and now he's not exactly in tip top health, so he doesn't want to take anything that will be hard on his liver. He can live with an ugly toe, but he's rather attached to his liver, so he's just been living with it. I might mention the tea tree oil to him, since he doesn't have much to lose, but I'm skeptical.
Here's waht he said:
"It's an oral antifungal medication you have to take for a while. Yes, it's fairly hard on your liver. Should be safe for a healthy person who isn't taking any other meds, but some doctors don't like to take the chance, even when a person is in great health, and they'd prefer to remove the nail, since it's not exactly life-threatening. When I last looked into it (~10 years ago) the most common prescription was oral 'Lamicil' [thats the brand name] -- there may be better/safer drugs now. I took it once before with no ill effects."
If you remove the nail, <cringe>, it will grow back. The skin underneath is sensitive *because* it's not covered up. Once you remove the nail it toughens up. I think they remove the cuticle, too.