Final answer:
The treatment of choice for the baby's symptoms, which are indicative of bullous impetigo, is Mupirocin ointment, as it is effective against the bacteria causing this condition.
Step-by-step explanation:
The symptoms described in the question - rash in the diaper area with 5-10 mm sized fragile blisters that break easily on a red base with crusting and a fine collarette of white skin - are indicative of impetigo, particularly bullous impetigo. This is a bacterial skin infection that typically presents with larger, fluid-filled blisters that rupture and form a yellowish crust. As there is no history of fever or other signs of systemic illness, the treatment of choice is topical rather than oral antibiotics. The best option among those listed would be Mupirocin ointment (C), which is effective against the bacteria most commonly responsible for impetigo. Other options like Neomycin, Polymyxin, Bacitracin ointment (A) are also used for skin infections, but Mupirocin is specifically indicated for treating impetigo due to its efficacy against staphylococcal and streptococcal infections.