Here are some websites with info on DE, and online sources for it:
https://www.backyardchickens.com/web/viewblog.php?id=1560-Food_Grade_DE
http://www.shadowridgedonkeys.com/index.html
http://www.custommilling.com/
DE will keep the population of mites and lice down if used in the litter and dust baths, sparingly, but is not enough to treat them when they are infested. They need a quick kill then, either 5% Sevin dust or a permethrin/pyrethrin spray or dust. Lice and mites can kill a chicken, they suck so much blood, so it is important to attack quickly.
I stay away from dog flea soaps because one of them is dangerous and I dont know which. I can buy "poultry dust" in my feed store, which is permethrin/pyrethrin. This chemical combo is also sold as Adam's flea and tick spray, and Adams may make a dust as well, not sure. Adam's is available at the vet's or
WalMart.
Yes, retreat in 10-14 days, and yes, treat the coop. You can make a sort of whitewash of DE and paint the walls and roosts.
You might also be dealing with fleas; same treatment.
My DE came from Custom Milling and is in a clear plastic bag, but it is still food grade DE. Most people find it hard to buy locally.
Ivermectin, a cattle wormer, kills some of them but not the ones that live only on the feather shafts.