Trent - I had a similar problem with my pup when he was about a year old. It turned out to be a yeast infection. Exact same spot, very stinky - kind of a sickly odor, if that makes sense - not really a dog stink. .....Worth a try. It seems like most vets (and some people on this board <img src="http://www.leerburg.com/ubbthreads/images/graemlins/smirk.gif" alt="" />
always want to stampede toward an allergy diagnoses. .....
True, true, true.
A yeast infection is caused by a yeast called Candida albicans, an opportunistic yeast that normally lives in the body and intestinal tract of the dog. The job of candida albicans is to recognize and destroy harmful bacteria. In a healthy body, candida albicans is controlled by a properly-functioning immune system and certain "good" bacteria.
If the immune system is weakened, the population of friendly bacteria decreases, and candida albicans will shift from yeast form to fungal form - and the yeast infection starts.
Yeast infection symptoms can affect all parts of the dog skin and the mucous membranes, with humid places being most susceptible (ears, folds, etc.).
Symptoms are itchy scalp, skin rashes, and possibly inflamed pimples with flaky edges. Sometimes the skin feels greasy.
No matter whether it's primary (or secondary to allergies), grains in the diet feed yeast infections, IMO. The grains are feeding a condition that exists, generally, as opposed to the grains necessarily being an allergen. (Grains are also an immune-response-damaging nutrient in large quantities, IMO, because of the stress on the canine system to produce abnormal amounts of grain-digesting enzymes.)
Biljac contains corn, brewer's yeast(!) and molasses. One dog who has no trouble with it can't guarantee that another dog, who may have trouble with yeast overgrowth, will tolerate it.
It sounds as if Jeff's dog had a primary infection, since the topical treatment worked well. Your dog may, too. But if his response is secondary to allergies, the allergies will have to be addressed before the response can be eliminated.
Yeast is not simple. The vet may be way oversimplifying that answer, and I'd want a vet dermatologist opinion. At least, I'd want to do what Sarah suggests, which is a scraping. Yeast is very often combined with bacteria.
Saying "allergies" and not addressing both the present infection and the *possible* underlying allergies seems to be much less than what you really need in the way of a diagnosis and treatment.
I would keep a close eye, checking every day or so, on his ears. Watch for any inflammation and get him to the vet if you see any, before you have a full-blown ear infection. And I'd eliminate grains, allergy or not.
This page -- scroll down to "yeast" under "Infectious Dermatitis" -- gives a good overview.
http://www.thepetcenter.com/gen/itch.html
Yeast can be treated, but not (IMO) with a dismissive "allergy" statement. I agree with Jeff about needing a much better diagnosis.
P.S. Editing to add that Omega 3 EFAs in the form of fish oil plus Vitamin E can help a lot to support the immune response, which is where all yeast overgrowth problems originate (whether primary or whether secondary to allergies).