Lexi, to me it sounds like either eczema or a med reaction (I've had what you describe in both cases). Eczema can hurt like crazy if you scratch it. I get these huge patches on my shin every now and then and people end up asking me how I burned myself, because it gets that red and thick from scratching. And it definitely hurts when water touches it!
I dunno about the leg swelling. I get it too, but I have a clotting disorder. Are your legs red and warm to the touch? Does it hurt to walk or exert yourself? That I would definitely check into ASAP.
At a med supply store you can buy TED (thromboembolic device) hose. They're ugly as sin, but they apply compression and help keep the leg swelling down. TED hose can be bought OTC, or if your dr. thinks you need it and will give you a prescription for it, you can buy custom-fit support hose that apply MUCH more compression than TED hose. Actually, I have a pair that cost my ins. co. $143 that I never wear, let me know if you'd like them! LOL
Hope it all works out for you.
Candy