I am currently drawing a Japanese dragon, and I have no clue how to really layer the scales. Everytime I start to, it gets flat again. And then I have to erase and start over.

Does anybody have a technique that they could share, or atleast offer me some advice on the matter?

My brother carved a dragon. It has detailed scales carved right in. You could look at the picture to see how light plays on it. Here is a link to his page, Rant and Rave. To see more detailed pictures you will have to log in, simple to do. Another idea along the same vein is to look at a crocodile.
Paulette