Diabetes can cause increased dryness especially of arms and legs. Red spots after bath are perhaps due to dryness and inflammation around the hair follicles. Please don't take hot water baths (use luke warm water). Have short baths. Try to apply oil before bath and use a thick non-fragrant moisturiser after bath. Repeat moisturiser application 2 more times in the day. If it does not subside see a dermatologist.