The pic of his back reminds me of a pic I've seen of fur mites. What did the vet treat him with?
I agree that a blood panel would be useful. He is getting to middle age, and at that time every vet I've been to recommends an annual blood panel to keep an eye on liver/kidney function. This skin infection/scald sounds pretty serious and it may be due to the presence of abnormal things in the urine, that are damaging to the skin, similar to what angieluv said.
Giving him more room to move about would also be good. Also, putting down towels could make other places more comfortable for him to lie on. My bf's nethies will sit in the hay/litterbox area, or a towel, but not on the hard floor. They make nests out of any cloth laying on the floor so that they don't have to lie directly on the hard floor. They even have taken over a suitcase I had out once while unpacking from a trip, and they lie on it all day. He may like softer surfaces, and that's what's keeping him in the litterbox.