Red rash around vaginal area from pad during period is this normal or can it be due to some type of disease?

Friction/allergy. This sound like a friction burn to the area from the pad or an allergic reaction to any adhesive on the pad. Consider tampons, changing brands, explore other alternatives. See gyn or dermatologist if this continues or can be resolved.
Go organic. There are organic chemical free pads available. Heavy bleeding can be a source of this as well.