First, keep in mind that my knowledge of this treatment came by word-of-mouth from my Grandfather who has not been available for consultation since 1965...
The conversation was his explanation when I mentioned the students in my class who got the treatment - presumably from a parental unit - because they had critters in their hair..
For the lice, you used bottled shampoo or made some soapy goo by taking your trusty pocket knife and shaving soap off of a bar of the stuff into some water and letting it get 'gooey' that is, turning bar soap into a semi passable liquid - then stirring the aromatic hydrocarbon (diesel, kerosene, paint thinner, white gas, er, naptha, whatever you had on hand)(quantity unknown - maybe the old timers has some way of knowing how much was enough by smell, sight, or viscosity - who knows) into the goo and then shampooing with it. I guess that would even include the wood-ashes lye soap out on the frontier...;-)
I'm sure this treatment did not serve to alleviate dandruff though ;-) And I don't recommend getting a dose of headbugs just to experiment with how much coaloil, er, kerosene to mix into your shampoo to kill 'em off.. ;-)
Oh, naptha. Thank you for the clarification!