Can't really see anything from the pic...could have nicked it on something, could be a hot spot on the way or just an itch he aggrevated...the CO topically will help heal it...if you think he may be having a reaction to the CO, then don't use until it's healed, then try again. I doubt that 2 days of use is going to start a herx reaction (when toxins are eliminated and symptoms get worse before they get better - also called a healing crisis).
Whatever you choose to put on to heal it...what I found works great to keep from licking it off is to take a childs knee high tube sock (like for little girls), use white cotton ones...cut the toe off...slide your hand in the top end of sock and bunch it up, cup the paw and dew claw and just slide the tube sock up the leg....the heal of the sock will fit nicely over the elbow and the elastic part shouldn't be too tight...then distract for awhile.
He is your friend, your partner, your defender, your dog. You are his life, his love, his leader. He will be yours, faithful and true, to the last beat of his heart. You owe it to him to be worthy of such devotion. - Unknown