What's wrong with my dog and how can I help him?

It sounds like this dog may have recently joined your home / family. Perhaps he previously had some negative experiences - or not I'd guess the dog probably wants your constant approval and avoid disapproval from you, perhaps creating some stress for himself.

Positive reinforcement training sounds with lots of verbal praise and pats, or paired with a clicker, like it may address some of these issues. Instead of having to say no or disallow, you want to pre-empt it and set his up for positive outcomes.

For example, if he wants to watch you while you're in the kitchen, create a place for him (as simple as placing a bed nearby and training him on the "go to your bed" command and "stay" where he'll rest before you go into kitchen. When out on walks and you see other dogs whose path you may intersect, turn and change your path, with a happy voice "this way, let's go" command (easier to train this indoors before distractions are present) so the dogs don't get an opportunity to approach. There are some good video sources of this on you tube.

A good bath with dog shampoo and regular brushing, as well as healthy nutritious food, will help improve his fur,

I agree. Instead of "no", distract by giving a positive command & bridge with a food reward + positive verbal praise(same command, same treat, same praise no more than 1 or 2 words with high voice & emphasis on the 1st word-GOOD BOY. Repetition, consistency. Inevitably next command will be "Stay.." then reward for even a brief stay, lengthening the stay little by little. Absolutely no attention to any scratching that you want him to stop .it takes a little time. Of course make sure he has a vet check-skin scraping-no fleas, no mites, etc.

It seems your dog is extremely stressed out and anxious, and you should start with a vet visit. Then a behavior specialist would be a good option too.