Simplecef is a good skin antibiotic, so it should help IF there is a bacterial infection. The problem might be that it was not given long enough to make a difference. Most infections are cured in two weeks, but deep infections take up to 2 months of treatment.
The first thing I might do is a skin biopsy. This can be done by your regular vet, and it can be done with a local anesthetic, so your dog won't need to be put under a general anesthetic. That way we can tell if this is just an infection, perhaps secondary to an allergy or other skin disorder, or if it is something different that requires different therapy. I would also make sure to do some skin scrapings to check for mange and check for ringworm by doing a fungal culture.
In the mean time, I would put your dog BACK on Simplecef (or a similar antibiotic), and put him on it for a minimum of 4-6 weeks if we have a bacterial infection. I would also do medicated baths with Chlorhexiderm shampoo. Your vet may carry this or you can order it online. It also helps in cases of ringworm. Here is a site you can buy it at:
The baths need to be given twice weekly, and you can put on a conditioner afterwards or use a conditioning spray as needed. I've found this doesn't dry out the skin much, and is pretty gentle (2% strength). You need to let the lather soak on his skin for 10 minutes.
I would also change his diet as I mentioned above. My favorites are Canidae and Natural Balance. Change over the food slowly so he gets used to the new stuff. If you go too fast, he will get diarrhea.
See if your vet will do the above tests for you (unless they have been done). He should have a biopsy, skin scraping, and fungal culture.
As an aside, I just treated a Bichon for ringworm. He developed scabs all over his head that did not go away with antibiotics. He got the sores after going to a groomer. Turns out it was ringworm, but looked more like a bacterial infection. He was treated with creams and shampoo, but it took 3 months to resolve. So, make sure your vet has done the test for ringworm! You just never know!
I would also want you to keep him on the fish oil. That is very good for the skin.