Did you have the genetic test performed to for the presence of the MDR1-1A mutation in the collie?

Test ordering

You have a 1 in 5 chance your dog is homozygous for the un-mutated gene. If this were the case then your dog would not be at risk for Ivermectin. The chances of being heterozygous (1 normal copy, 1 mutated copy) is about 50%. It might be possible to treat with low dosage Ivermectin or Mitaban. Of course if it's homozygous for the mutant gene then Ivermectin is out, and administering Mitaban may have risk.

With the genetic results in hand then what? Since you make no mention of swollen lymph glands, the Demodex seems to be staying local and should be treated locally. You mentioned you tried Goodwinol ointment, but was the dog on antibiotics at the same time? The crusting and inflamation is most likely due to Staph/Strep infections secondary to the damage the mites are causing to the skin. This makes it even more difficult for the skin and hair follicles to rejuvenate. Typically antibiotics in combination with Ivermectin are given for systemic demodex. You might consult with your Vet about adding antibiotics and treat locally with the Goodwinol ointment, or diluted Mitaban. Dipping your Collie in it seems over-kill, and on a large surface area may be toxic again depending on the genetic answer.

Don't expect the condition to clear up in a week or two. Demodex may take upwards of 3 months to get rid of. Also even if the local treatment starts working, the appearance will seem worse before it gets better, as more damaged follicles drop hair. In another words a delayed effect.

Another thing you can do which might help a little is to start supplementing the diet with fish oil (2000-3000 2X daily) along with 400 IU Vitamin-E (dry form). The Omega-3s in the fish oil have anti-inflamatory properties, and the Vitamin-E will help accelerate the healing and recovery of the skin.