I'd be more concerned about the bloody diarrhea than the rash, but both are problems. Maybe you need to change vets. The bloody diarrhea could indicate an injury to his intestines or stomach, depending on the color of the blood. Diarrhea can lead to dehydration if it isn't brought under control; dogs can take an OTC medicine like Immodium. Look up on the internet for dosage for your size dog. As to the rash, it could be caused by all sorts of things; probably it's an allergic reaction to something, but it's hard to know what. You could try bathing the area with an oatmeal-based dog shampoo. It's soothing for itchy skin. I'd make an appointment with another vet; ask your friends with dogs where they go.