I have been putting it on since birth, but maybe next time I'll change the ointment. This is a really heavy cream. Sugar's litter last year had it and I used dish soap without any problems. Oh well, next time I'll go back to the dish soap as this didn't seem to do the trick. Thanks for the info Pat and Lisa, it always helps to have a different perspective.
I don't think it's hereditary. Sugar (totally different line) also had reds and a tri, they all got the 'cradle cap' thing, but when I started using the dish soap it went away. I don't think it should affect the ability to show, unless they lose all the white and even then, there isn't a disqualification for that and I don't know if it's even considered a fault really. Depends on how much white is on the tail tip. If you even have a few hairs, it's okay.