I would ABSOLUTELY tell your daughter's teacher and the principal about this rumor, and have it squashed immediately. Kids can be so nasty, and your daughter has enough on her plate without that.

As for the scalp, we use Sebulex dandruff shampoo for her really bad scalp days. It is a strong salicylic acid and sulfur shampoo, but it STINKS. I would use it on Friday night when she doesn't have to go anywhere for a couple of days. Seriously, it smells that bad. We put it on our daughter's head and let it sit for at least five minutes -- for really bad scaling, you might need to let it soak longer. It is so strong it burned my daughter's neck, so I always put a layer of Aquaphor on the back and sides of her neck before she gets in the bath. Follow the shampoo with Curel lotion in the hair and comb with a fine tooth/lice comb to remove scales.

I've also heard of African-American women pouring olive oil in their hair, wrapping their heads in a turban, and sleeping in it overnight. You then wash out the oil for the daytime so your hair isn't greasy. Don't know if that one works, but if you try it let me know!
_________________________
4 year old daughter with CIE