My horse vet is the same way, he always makes me feel stupid and never really listens to what I have to say. Unfortunately in this area I don't have much choice in equine vets. So I can relate to you. BUT you can change vets and you should!
It sounds to me like both dogs have a parasite, and if you treat them both it should get rid of the itchiness. Also, the dryness should clear up somewhat too. In the meantime I would bathe them with the oatmeal shampooto give them some relief. I used the Aveeno oatmeal baby shampoo on Pita when she was really itchy with flea bites.
Your babies could have scabies which sounds worse than it is and is easily treatable with Ivermectrin. It can be spread to you. I had a friend whose kids had it and it is miserable.
I also use the Brewer's Yeast which deters parasites and fleas, Pita eats them right up and I get them in the dog section at Wal mart.
Here's an interesting link:
http://www.lbah.com/sarcoptic_mange.htm#symptoms
Good Luck!