Hi Everybody who emailed me privately along with some messages here on the post. To this day, nobody knows what it is. I would consider molluscum but my child is the only one who has it in the family and it is not contagious. She doesn't develop internal scars from it. However it leaves very flat white scars and the BIG wound you saw in the picture, there is a big white scar from it. It now looks like a big white birthmark. Unfortunately. She has very pale flat white scars all over her body which are tiny in number and you can't notice until you look closely. She has outbursts every now and then and I have been trying to keep it under control with lavender essential oil mixed with some olive oil and thieves (or cloves mixed with cinnamon and couple other oils) but...has the rash gone away? No... its always there residing in the background. Occasionally it appears on her face and I pray fervently it goes away and doesn't leave a scar and a lot of times it just leaves.
She is now 22mo old. I am considering taking her to a juvenile rheumologist to run some blood work and see if there's an internal immune disorder. There's a rash called morphea or worse yet, discoid lupus.