omg my daughter had the worst cradle cap ever! seriously, her head was disgusting. The OCD in me just couldn't deal with it. I finally got her baby comb and just scratched the hell out of her head. It didn't hurt her, mind you, in fact she seemed relieved. Whenever I scratched her head with my fingers she seemed happier for it so I just used the comb.
Originally, I did the soap thing and the body lotion deal, but with her hair, it just wouldn't work. But after scraping it all off with the baby comb, it never came back ... although my futon was COVERED with all that gross dead skin. Ew. Even after washing the cover I couldn't sit there for a week. *shudder*