DE won't kill mites, unfortunately. I've had a couple infestations (wild birds carry them, so it's difficult to NOT get them once in awhile). The only way I was able to get rid of them once when it was a particularly bad infestation was that I used poultry dust - it's like seven powder, but made for poultry. Dusted each chicken (you MUST do them ALL) liberally as you described, then I moved them to an area I knew to be free of mites (I used a spare horse stall for a few hours). I then removed all the bedding, and even Shop-Vac'd to make sure I got all the little pieces. I sprayed the walls and nest boxes lightly with flea PREMISE spray made for dogs, as that kills mites as effectively and also kills eggs. Then, I allowed it to dry for several hours, and then sprinkled everything with the poultry dust and added fresh shavings. I did ALL this again 7 days later, to make sure to treat any mites that hatched out. It's a huge pain to get rid of them, but they wreak havoc if you don't.
