Looks to me like it was mange. It takes 6-8 weeks to rid a dog of mange. My puppy had that just after getting over parvo virus. Benzoyl peroxide shampoo for dogs is a shampoo that has anti-bacterial, keratolytic, anti-pruritic, and de-greasing functions. It can be purchased over the counter or through your veterinarian. In addition to its bacteria-fighting and drying qualities, benzyl peroxide shampoo flushes hair follicles. This keeps the hair follicles from getting infected and worsening a skin infection. Follicular infections can cause additional skin irritation and worsen the dog's condition.
This type of shampoo is useful in treating skin conditions like mange, hot spots, and lesions. It works really well. You have to get the dog in the bath, wet her and they apply the shampoo and leave it on for 5-10 minutes, then rinse. Also, I know she is getting better, but Ivomec, is what I used to treat my dog with mange and it takes at least 6 weeks. Your vet is right, ALL dogs have mites on them but their immune systems keeps them in check, when a dogs immune system is compromised this is when the mites can get out of control. Glad to hear she is feeling better and everything is under control