Seems like you have angular cheilitis too. When I do the leave it alone method, the skin on my moustache and around the mouth starts to build up these flakes. (Similar to Daniel Miller's) Since I've used Aquaphor it's gotten better.
Well, the type you should use is the healing ointment Aquaphor. Mine says "soothing skin balm" not sure what the difference is but it works just fine.
You can show the link but Amazon is just a more trusted site to buy online.