Atarax causes drowsiness, so it should be avoided in such a small baby, unless its direly required. For bad diaper rash we can apply candid cream (antifungal) 2-3 times a day, along with any zinc oxide containing diaper rash cream (a thick layer of cream) after every wash. We seldom need to give oral medicine for diaper rash unless its due to some bacterial infection. I need to see the rash to rule out any bacterial infection.