omigosh! Poor thing...that looks so uncomfortable!!
It doesn't look like a hair issue. Have you tried probiotics? Many members here swear by Nature's Farmacy Probiotic Max. My two little ones have been on it for the past month or so, and so far so good. Maybe give that a try?
I also soak their food in warm water (then dump out the water) before feeding them so that there is more moisture in their system, which helps a lot with their bowel movement. Before soaking their water, the poop always looked shriveled and dried up and they'd strain a little bit. With the soaking, the poop is perfect consistency! Beautiful playdough looking poop most of the time!