Thanks so much for all the helpful replies. I'm going to get poultry dust and keep doing them every 7 days until I feel the lice are gone. My poor birds. I thought they were moulting (well, some are) until I saw the new feathers that were just coming in falling out as well. I kept looking for mites because I have dealt with them once before. I checked under the wings and at the vent but didn't see anything. Then I noticed the frayed and worn feathers and the light bulb finally went on. Duh. This dusting is stressful for them but they will feel so much better when I get this under control. I also bomb the coop with Zodiac, air it out real good and dust the nest boxes and roosts with Sevin. I did not clean out the pine shavings because I had just added three new bales and didn't want to throw it all out. I'm hoping the Zodiac will kill anything on the floor. I'm also adding a very large dust bath box filled with DE, ash and sand. Hopfully that will be a more proactive approach to this problem. Wish me luck!
I hope it works out for you. They love to eat charcoal/ashes and it is very good for them. Good for you for giving them this excellent source of minerals. Also excellent bug prevention.