Unfortunately nystatin as a topical treatment is pretty darn ineffective in my experience. But who knows it might work for you. As an oral treatment nystatin would not treat the skin b/c it works differently than diflucan. Nystatin kills the fungus on contact so what your son takes in orally will never come in contact with his penis skin. Diflucan works differently in that it prevents the growth of fungus and is absorbed through the system. I tried nystatin and it didn't work for my son's butt yeast. Oral diflucan was the only thing that worked for us, my son had internal yeast and yeast around his anus. For his anus I actually made my own treatment. I dropped 5 drops of Citricidal Grapefruit seed extract into a 2 oz of water. (Stir well). You need the name brand one and make sure it says professional strength. This one: http://www.crohns.net/page/C/PROD/CVR0621
At every diaper changed I swabbed his anus with a cotton ball of the solution. I never put it on my son's foreskin so I have no idea if it is safe for the foreskin, but I imagine it would be okay. If you do use it make sure it is very well-diluted.
If it were me:
I'd first stop
using anything for a couple days and keep him in sposies to see if it gets better. Be extra careful not to use soap on his genitals and make sure he isn't sitting in soapy bathwater. Also avoid using wipes on his penis unless you need
to. You can get some acidophilus (probiotics) at the health food store and give it to him orally and put some on him topically. Then, if you don't see any improvement get the culture and while you are waiting for the results try the topical nystatin. If the culture comes back positive for yeast then you can decide if it might be better to knock it out with the Diflucan.
As for the diapers, you really need direct sunlight. I think it would be fine through a window. I know that vinegar rinse alone probably won't get out the yeast and you could risk reinfecting. You might be able to treat the diapers with the Citricidal but I am not sure of the ratio you would need. Keep him in sposies until you find out fore sure what this is.
Does the skin look peely, dry or bumpy?