I had this happen to a cat I had a few years ago (he died :-( of old age). He had a flea allergy and all the hair on his body practically fell out between just the allergy and the poor kitty scratching. What we did was bomb the house, vacuum constantly, and he had to have flea baths often for awhile. Your vet might be able to give you some flea bath that won't irritate your dogs already sensitive skin, and that is stronger than what you find in the store. After he starting looking a little better we used one of those monthly flea control things that you put on the back I think it's called Advantage (but there are other ones) and that kept the fleas under control and his hair grew back. I know that the flea meds can be expensive, but the cheap ones don't work, and if you go to the vet you can usually buy one months worth at a time. Also something to keep in mind is if the dog doesn't have fleas she might just have a nervous spot. My dog does that. He licks a spot on his leg until it is raw. They had meds for that too. Good luck with your dog!