My two year old has a dry scalp. what can i do to treat this?

Little dab'll do you: Try a little dab of olive oil on the scalp. Think about what you're using to wash your kid's hair. Could the shampoo be drying out the scalp?

Seborrhea: This is seborrheic dermatitis (yes, it does occur in children), and should respond promptly to a mild anti-dandruff shampoo (head & shoulders or something similar). Avoid tar and salicylic acid shampoos, which are too harsh for young children. And with all respect, please don't apply olive oil; it will only make it worse.