epicmom,
Sorry to hear of your little girl's discomfort. I have heard that a LOT of babies are allergic to J&J, especially the Top to Toe. In Antenatal class our midwife actually advised not to use it since she she has had to deal with a lot of cases of cradle cap and eczema if mom's used this product.
She also advised coconut oil, or even olive oil to use for cradle cap, and exactly as Marijke said, dont use anything but normal water with a few drops of baby oil to bath. If you HAVE to wash hair, use Elizabeth Annes (the pink, soap free shampoo, looks like a lotion) and only wash hair once a week.
If it really is eczema though, it would be better to get something (a cream specifically for skin allergies) from your pharmacy or GP to clear it up quickly, to minimize her discomfort.