Thanks to Angela for this Frugal Baby Tip!
As for lanolin treatment, that's what I use. From directions I got from a post on ParentsPlace I take an inch of lanolin from the tube and add it to a tablespoon of vinegar in an epi bottle (small bottle I recieved from the hospital after my son's birth). Add a bit of very warm water and close the bottle... and shake for all I'm worth.
After the lanolin and water are well mixed, I add that to a sink full of very warm water. I set the time for 15 minutes and every five minutes I go in and swish the soaker trying to get every inch of soaker well saturated.
After 15 minutes, I gently squeeze the excess water from the soaker (usually by opening the drain, and letting the water run out of the soaker) then roll it in a towel to get the rest of the water out. Then let it air dry flat.