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Well if it smells moldy, it's likely is Favus. It's not serious, just unsightly and uncomforable. I don't remember what you treat for it, but anything that treats fungal infections should work. It usually goes away on its own I think. Yes, she can eat the olive oil too, and it won't hurt her...

The loss of feathers around the neck is a result of the roo. He's playing too rough. The scaley face... does it smell moldy? Could be favus, a fungal infection. But it's more likely just dry skin. It's not pretty, but not harmful. You can put olive oil regularly on her face to make it go away.