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Ringworm
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One of the more common infections in a dog's skin and coat is called ringworm. While it is called "worm," it is actually a fungal infection that can cause flaking, itching, burning and irritation to the point where the dog will scratch itself raw. Since the infection is a fungus, it often carries a damp, musty odor which can be detected in the hair of the coat. It also makes the hair fall out at the source of the infection.
Hot Spots
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Also called acute moist dermatitis, hot spots are reactions to flea bites or other skin irritants. Signs of this disease are moist, oozing skin at the source of irritation, scabby crusts and a foul odor. Treatment is for the source of the reaction, and steroids and topical treatments for the sores themselves.
Yeast infection
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A main culprit of mildewy smelling fur is a yeast infection. The skin becomes oily and yet produce crusty sores that itch and create hot spots. Yeast, which is normally present on the dog, sometimes causes an infection which must be diagnosed and treated by a veterinarian. Oral and topical treatment will rid the dog of the infection.
Mites, Sores, Infections
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Pretty much any irritant that can occur on a dog's skin can cause an infection if the circumstances are right, and many of these infections can result in an odor in the coat. Some of the odors are mild, and some are very strong and putrid. Whatever the cause of the smell, it is the cause and not the smell itself that must be treated. Simply washing the dog with a strong-smelling shampoo will only mask the symptoms, not cure the disease.
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Canine Diseases That Cause Musty Smelling Coats
A dog usually has a certain "doggy" odor whether it is clean or dirty, and this is normal enough. But some diseases characterize themselves with distinctive odors in the coat, and these need to be treated in order to avoid adverse effects.