I missed this somehow when you posted. How's it going now WTBAB? Did you find out whether it was lactose or milk protein?
Rooby1985 wrote: Now that we're doing BLW, are foods that 'may contain traces of milk' okay?
I'd guess it would be OK but all you can do is try. My guess would be that the only situation where potential "traces" would not be OK is if the reaction was quite severe, ie anaphalaxis.
My A is now 3 and still quite allergic to dairy. He reacts to skin contact and gets wheezy and very sneezy/itchy eyes if he has even a sip of milk or a tiny amount of other dairy (this has mostly been from flavouring on crisps), but he's fine with a plain biscuit containing dairy (only given very rarely), and is definitely fine with "traces".