Well, did they do a skin scraping of the "red" or scaly areas, bc they should have...? That would show whether or not there was a bacterial overgrowth (infection) going on. That would be pyoderma.
The paw chewing and licking is the cardinal sign of allergies. For allergies, read this entire thread:
http://www.yorkietalk.com/forums/die...tart-here.html