I think there are some threads around on cradle cap but we just used olive oil before a bath and washed it out then gave a comb. It looks bad but isn't really a problem to worry about as such. Once the hair grows you wont be able to see it. A large percentage of bubs get cradle cap.
Also bubs can get spots for heaps of reasons eg baby acne or just where there sweat glands are developing. Our DS had ezcema and we had to bath only every second day in water only (no wash).
HTH