@umbra21 - In my experience the best way to stop kids from compulsive picking at scabs is to put a band-aid over the sore spot and just keep replacing it until the skin heals. It's not ideal, but sometimes that's the best you can do.
I remember my brother would not stop picking at a scab on his head when we were kids and in the end it became quite infected and the doctor had to wrap a bandage around his head to stop him from touching it. He was only very young though and just couldn't seem to help himself. The other problem is that when kids are that young they don't wash their hands as often as you want them to and they can introduce infection to an open wound much more easily as well.
So I guess another good tip is to make sure your kids wash their hands well, with soap, as often as possible if they've got a scratch or something that needs to heal.