Sounds like weeping areolar eczema.   I think we can sometimes waste time
treating and re-treating for fungal over-growth just because we get
distracted by the location of the breakout -- ie the nipple.  We sometimes
forget its still skin, and the person most likely to have some effective
therapies for skin is a dermatologist.  I refer you to Lisa Amir's article
some years back in JHL on a similar case.  I have worked with such a mother
(it's actually one of the case studies I just presented at Kay Hoover's
workshop) who treated forever until she saw a dermatologist and initiated
corticosteroid treatments combined with topical antibiotic (bactroban) to
deal with the fact the eczema made the skin vulnerable to infection.  Mom
had horribly allergic child, many similarities to your story, Shirley.  Also
Paget's disease can present like this, and biopsy should be done to rule
that out.
Barbara

Barbara Wilson-Clay, BS, IBCLC
Private Practice, Austin, Texas
Owner, Lactnews On-Line Conference Page
http://moontower.com/bwc/lactnews.html