Clinical signs
The first sign of lice that most people notice is the scratching. Suddenly the dog is intensely itchy. Upon close inspection, you might see some small, tan to medium brown colored critters down near the skin. You can tell lice from fleas by the color (fleas are quite dark) and the speed (lice are quite sluggish movers, while fleas usually zoom out of sight before you are really sure you saw anything).
You might also notice the nits on the hairs. They are quite difficult to see with the naked eye. The empty shells look most like little bits of dandruff or dead skin. One way to tell is to use a flea comb to collect hair from the area you are suspicious of. If you can shake the hair and the 'flakes' fall off onto the countertop, it's just dandruff or debris. If the 'flakes' stick tight to the hair, they may be nits.
Dog lice on people
There is no need to panic if your dog gets lice! Dog lice do not like to infest humans. Most lice are quite species-specific; that is, dog lice like dogs and people lice like people. It is definitely possible for a dog louse to get on a person, and it might even bite or try to feed, but it will not set up an infestation. If you see a louse from your dog on yourself, just pick it off or squish it (once you've finished screaming).
Treatment of all in-contact pets
Treatment of lice is relatively straightforward. Many insecticides kill lice. Most flea shampoos contain pyrethrins or organophosphates and do a good job of getting rid of louse infestations. Topical insecticides like imidacloprid (Advantage) applied topically every 2 weeks will also kill lice. Selamectin (Revolution), while not labeled specifically for lice, may also be effective. Permethrins (different from pyrethrins) are also effective insecticides but due to the potential for accidental toxicity to cats, I rarely recommend using permethrins for dogs.
Use extreme caution when applying permethrin-containing products to dogs with cats in the home.
Permethrins are very toxic to cats, and can get onto the cat from contact with the dog.
Never, ever apply permethrins to cats - read all packaging carefully!
You have to keep in mind two things. First, that nothing will "kill" the eggs. No insecticides will penetrate the shell of the egg and zap the growing nymph. And second, most insecticides (there are some exceptions) do not have much "forward" effect. That is, they don't last very long on the dog's coat and skin.
If you bathe the dog once, or apply one treatment of Revolution, you will kill the adults and nymphs. In a week or two, though, the nits will hatch and you will have a whole new generation of lice. Unless you have used a persistent insecticide (like Advantage) there is nothing left on the dog to kill this new generation.
This brings us to the various recommendations for treating lice, and you can now appreciate the logic behind them. In order to get rid of the lice on your dog effectively and permanently, you will need to reapply insecticide on a routine basis for at least 4 weeks. All animals in the household should be treated whether you have seen lice on them or not.
Any of the following should be effective at ridding your poor beleaguered pet of lice. There is no need to use more than one kind of treatment.
1. Advantage or Advantage Multi topical, applied every 2 weeks for a total of 3 treatments. That is, applied when the problem is first seen, then again 2 weeks later, and 2 weeks after that. The label on Advantage calls for re-application every 4 weeks. The "problem" with this (for lice) is that the Advantage does tend to wear off and become less potent over that 4 week period. It is safe to re-apply it after 2 weeks, and you will be keeping the concentration of Advantage nice and high in order to zap the newly hatched lice as soon as they emerge.
2. Insecticidal shampoos once a week for 4-6 weeks. A good flea shampoo containing pyrethrins or organophosphates will work very well. Make sure that you follow the directions on the label regarding contact times. Most insecticides should be left on the coat for a 5-10 minute period in order for them to kill the lice. Each product will state on the label how long to leave the shampoo before rinsing it off. If you rinse too soon it will not be as effective.
3. Revolution, applied every 2 weeks for 3 treatments.
4. For those who do not want to use insecticides, lime-sulfur dips are extremely safe, non-toxic to pets (we used to use it on tiny kittens to treat ringworm) and very effective. They have the disadvantage of staining the coat yellow (temporarily) and having a somewhat objectionable odor (sulfur). They should be repeated weekly for 4-6 weeks.
5. Flea combs will help to remove both living and dead lice. Clean the comb afterward by immersing it in a container of water with some flea shampoo or other insecticide and letting it sit for at least 10 minutes, or until you don't get the heebie-jeebies touching it, whichever is longer.
Environmental decontamination
Wash all bedding in hot water. I would dispose of all combs and brushes or other grooming equipment, as they may have nits stuck to them that will be hard to remove. They will also be hard to see you may never know whether the combs are really nit-free. It's better to just chuck the lot and start over again with clean instruments.
Everything else that your pet is in contact with is also fair game for a hot water wash, from doggie sweaters and other clothing to leashes and collars to kids. (Mostly kidding about the kids, but any excuse for a bath is a good thing.)
Quarantine
During treatment for lice your pets should be kept away from situations where they will be in contact with other animals. They can go to the parks and for walks, but they should not play with other dogs until at least 4 weeks of treatment have passed. They should especially not go to dog daycare or other high contact places. While the insecticides may have killed the adults on your pet, you never know when those pesky eggs are going to hatch and release more nymphs, which are definitely contagious to the next dog.