valkie, i know it might not be easy, but you will not solve these problems until your dog is off the poor quality food he's eating. you have to treat the problem from the inside out, no topical product or shampoo is going to make much if any difference at all.
i can't make a call on the skin condition without seeing some photos at least, but most likely the cause is a food allergy aggravated by the poor quality food. it's very likely they would clear up without extra help with a change in diet and some simple natural treatments for the skin to at least help with the itching until it goes away.
you will also have to prevent him from eating the cat food.
i can work with you on this if you like, but it will take quite a bit of commitment from your side. to work out a plan, i need to know how old this dog is and how long this problem has been going on. and any other details in regards to his health that you can possibly think of - no matter how small. what do his ears smell like for example, and are they naturally clean or do you have to clean them a lot? are his teeth and gums in good condition, does he have bad breath? has he been treated with any medications recently? do you use heartworm and flea preventives, and if so, what brand? is this dog an indoor or outdoor dog?
photos would help immensely, if you have a way of emailing them to me. best taken in natural light, one of each side of the body as close up as you can to get the entire dog into the photo. one of his armpits and one of the belly/groin area, and of the area where the "pimples" you mentioned are most prevalent.
please PM me with your email address so i can give you my main one. that way you can get a hold of me directly, but it's an address i do not generally post publicly.