milu use to have doggie smell when she was eating eukanuba kibble. but after she started eating better dog food, no more doggie smell.
there are also gentler shampoos you can use. my groomer recommended a brand of shampoo to me, it is really gentle. milu has dry skin too, but the shampoo works great for her. let me know if you are interested, i can go look and let you know what it's called.