Maybe you have been over treating. I treat roosters with leg mites for about 1 week with petroleum jelly. If they started out with bad mites sometimes scales come off and some never regrow. Maybe you just need to lay off the treatment and see if the red goes away. If my guess is right he may never have normal scales but that is just cosmetic and doesn't hurt a bird. Neem may actually be irritating the legs. Being natural doesn't mean their are never any side effects. Poison mushrooms are after all natural but can kill you.
Petroleum Jelly smothers the mites and doesn't cause irritation. If they are thick under the scales it takes several treatments. After a few treatments I sometimes take a think stick and dig under the scales to get the goop (someone called it keratin) out so they can't hide from the jelly. I can't tell that the petroleum jelly has any negative effect...in fact I had one hen that tried to eat it when I put it on her

Took some effort to keep her from taking a bite. After about the 2nd treatment I can tell the birds don't mind it that much - I think it feels good.
Here is another thread on the topic
https://www.backyardchickens.com/threads/scaly-leg-mites-natural-cure.755286/
Look at the pics here....how the leg looks varies a lot
https://tinyurl.com/leg-mite-pics the manifestation of leg mites are quite varied.