Dry skin could cause a rash. You know the saying, "dry itchy skin" Do you scratch at it? Sometimes scratching causes rashes as well. If you hydrate it often and it still continues to be itchy, then you may want to have a doctor look at it to make sure the itch isn't caused by a skin condition other than dryness?
Sorry your having difficulty. Lotion is not always the best however it depends on which type you use. Aveeno works well. Try coconut oil on your skin. Also take omega-3 fatty acids on a daily basis. This will feed your skin from the inside out.