I'd probably try using disposable nappies until it clears up. Also if you're using wipes maybe switch to cotton wool and water, I find wipes give my DS nappy rash so I always use the cotton wool and water and we rarely have a problem. HTH

ETA Meant to mention that a friend of mine who uses cloth nappies for her bub also had a problem with a fungal rash. Apparently the fungus (or whatever it is) can get imbedded in the cloth nappies so keeps reinfecting iykwim. She was told to soak all the nappies in detol to kill everything and also that it was really important to hang cloth nappies out on the line in the sun because that is a key part of killing off the bacteria/fungus in them.