Thanks so much for your descriptive post! Could you post a picture of your lips at your worst (you can crop the lips out in a program such as Preview), and now that they have healed (but without the lanolin on them)?
So, do I understand correctly you didn't get the steroid as a prescription from a dermatologist? My derm has me applying Betamethasone propionate twice a day for a week at a time, and of course I'm worried about the long-term effects, but I too have tried every kind of moisturizer and need to give steroids a shot.