A diffuse form of shingles can occur in people who are immune depressed. This would not be limited to a single area. However it does not sound like she is suffering from being severely immune depressed.
Taking thyroid medication means she is more likely to suffer from an autoimmune skin condition. Depending upon this, means she may have a number of associated skin disorders. There are several different types of excema which present in a variety of ways.
The skin biopsy is the ideal way to identify the problem as it will allow the dermatogist to see the changes at cellular level. As there are about 2000 different skin diseases, I will not produce names at random here.
General skin advice will be the use of an oral antihistamine to relieve the itching, and creams containing crotamitin will relieve the itch without clearing it up.
Anaesthetic gels containing lidocaine will also give symptomatic pain relief and if the skin is dry, ensure a fragrance free moisturiser is liberally applied to keep the area supple.
I am sorry I cannot help more, but it looks like the dermatologists are looking into the cellular levels of possible causes.
Best wishes
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