The detection oil, also refered to as diagnosis oil, created by Dedicate Crane to show if someone was infected with the blue pox consisted of patchouli and lotus as well as other ingredients. It was applied on the skin. If it showed red, that meant the person didn't have the sickness. If the oil turned white on the skin, the person was infected.
The oil was mostly applied on the forehead to ensure that people saw as soon as possible if someone was infected. However, it could also be applied on other places, like one's hand. Crane had spelled it to last for weeks for practical reasons, because this way people didn't have to apply the oil again after washing.
Usually the discovery of a diagnosis oil meant that the mages researching the sickness were halfway towards a cure. However, in the case of the blue pox even after Crane had discovered the detection oil, he was still nowhere near a cure. He said himself that finding the oil was simply luck.