S.D.
Sounds more like eczema than a rash. The lotion may be making it worse! Get a tube of hydrocortizone cream and put that on him for a few days. If it goes away it's eczema and you should explore what in his diet might be causing it. Most the time it's dairy and/or wheat.
Stop bathing him every night, that also makes it worse because the water dried out his skin:( Unless he's getting dirty paying outside or something, twice a week is plenty. Follow with hydrocortizone cream.