Do you think it is possible she shoved something up her nose and it is still there? My 2yr old son puts everything up his nose (he just started this) and we have to watch him like a hawk (especially food). My little brother and my cousin did the same thing when they were small and anytime we noticed a weird musty smell we would take them to the dr to check their nose and sure enough they had shoved something up there that was beginning to become infected.
I think I'd skip the powder b/c it can kinda start to smell but lotion should be fine, also make sure she is drinking plenty of fluids (water, juice, milk) - no caffeine or sugary drinks. Good Luck!!