My 7 year old daughter has had this same problem. She has had a rash around her belly button for a while now. I have had her to see a doctor over this several times, and they dont even know what it is. So, I started using different cremes to cure it. The only thing that I have found so far that makes it go away is an antifungal creme. But, it usually comes back again. So, I have had to treat it over and over again...So, if yoyu find out what this may be, please respond...