First of all, I'm sorry that you're having this problem Tracy
Does it look anything like this?:
http://tinyurl.com/7pse3
Sorry, this was the best picture I could find. You might be able to find better ones on Google image search, but I was in a hurry. This is Seborrheic Dermatitis and it pretty much is adult cradle cap, or very similar. I had cradle cap as a toddler (a bit old for it) and have Seb derm on my scalp as an adult. One of the worst places I have it is in the temple area you described, and when it's really bad it will kind of 'creep' down onto my face as well. My scalp will be red and I'll feel little bumps on it just as you described. Sometimes some will come off at times, like a scab, but it's just skin (and not yellow, as you said). If it's REALLY bad my scalp will burn like
fire as well. And itch... and iiiittttccchhh.
I've lost some hair to this in my worst spot (my right temple), but not much and I've had it off and on for at least three years now. Plus that's always been my most fragile, fine hair. It seems like, for me, once the "flare" of dermatitis is over the hair will start to grow back and just as it's getting going I flare again
This can be hereditary. I inherited it from my grandmother, who lost a fair amount of hair to it despite fighting it tooth and nail. This is the PCOS side of the family, but that could be coincidence. I can see from pictures that her's was also worse at the temples.
My advice? See a dermatologist pronto. Lots of things can be done for this and it can spread, or at least it has for me. Halfway down my back, to be precise. Until then, keep your hair as clean as possible (oil aggrevates it), keep conditioner off of your scalp if you can, watch for allergic reactions to shampoos/styling aids, and Neutrogena T-Sal shampoo will dissolve the crusty bits and help overall (it's OTC, but can be hard to find).
Whatever it is, get thee to the derm! They can help and you don't want to wait until the follicles are damaged or just to suffer needlessly!
Hope you find the answer hon! (((hugs)))
Dana