in the grooming biz I see a lot of cats that have the combination dry, flaky, matted skin/fur AND over weight. I truly believe that unless the problem is otherwise medical, a simple shedding of pounds will help the skin to clear up (I've seen it happen)
What type of food was he put on? If he is not overly fond of it that may help him to eat less (as long as he doesn't completely refuse to eat). I would not give up on the food too quickly, I am sure when he is hungry enough he will find that it is not so bad.
I am sorry that they laughed at you Moose.