Are his wipes scented?
The Nystatin would work if it were a yeast;
Bactroban is really good at keeping things from getting infected from bacteria, so that's good. Is it warm enough where you are to wipe all goos and stuff off of him, and let him lie nekked (

) on a blanket in the sun for a while? (putting sunscreen on the rest of him, if he's old enough, or just letting him be out 'airing himself' for a few minutes?).
Are the worse areas near where the elastic is in the diapers, and are they latex free? (you've probably checked all of this stuff already). If you go with cloth, and get the waterproof pants, check that they don't have latex- they make a bunch of them that you can get on line $$$$$$$$, but you wouldn't need that many. If he could even air out indoors on a towel, over a waterproof crib cover, that might help.....
I know it's hard to see them hurting, not understanding what's going on, and wanting to be able to fix it. I feel for you guys.