What we thought to be dribble rash on our DS turned out to be a form of eczema (it started around his mouth and then spread to his chin and torso). the only reason why I am mentioning this is that you mentioned it appears to be spreading and that it may be itching - which is causing him to lick it. I wouldn't use any petroleum-based creams on it because that will just further dry it out and may irritate it. Try and find a natural moisturiser like MooGoo or Grahams Calendula cream and pop that on. You can then use some olive oil as a barrier cream and apply it as frequently as necessary. If it continues to spread, I would get a professional to take a look at it. I can kick myself for assuming it was just dribble rash and leaving DS's to the point that it was all over his chest before I did something about it Good luck
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