I'd stop washing it, putting stuff on it, etc. You can easily, with all the best intentions, develop a vicious circle of dermatologic reaction by using too much, too strong stuff and burning the crap out of it in the process.
A blanket or sheet with a tail flap might give it some protection.
Where are you? Do you have sweet itch there?
And yes, put her on straight hay for a few days and see if that helps.
I called vet about skin scraping-said it was a good idea so that should happen within a few days. I am a little hesitant about MTG because I always hear conflicting stories on it, and she does have the open sores now on her tail that I am most worried about for the moment.
TB- I will definitely look into trying the olive oil spray, thanks for sharing your secret!
atr- I am in south FL, from what I have been reading, I think sweet itch is a problem here? I have never dealt with skin issues in any of the previous horses I have had, so I am a little miffed when it comes to her..especially since its been so difficult to treat. I did think about keeping her tail wrapped, but I am worried that it will keep her skin from breathing/healing. Can anyone yea or 'neigh' that? (lol)