Hello,
Without examination,confirmation of a diagnosis is tough,but it sounds like Fordyce spots.They small yellowish-white granules on the inner surface and border of the lips.
Treatment of Fordyce spots includes CO2 laser or electro desiccation, TCA chemical peels(temporary treatment),diathermy or laser vaporization.
For your dry lips, avoid licking the lips as saliva evaporates quickly resulting in them being drier than before. Drink plenty of water and take multivitamin supplements(esp vit B) and do not apply lipstick or other cosmetic products for some days. Use a humidifier to moisturize the air in your home and apply shea butter or Vaseline on your lips. Eat foods high in calcium, magnesium and flaxseed oil. If a week of compresses and emollients don't do the trick, you can add over-the-counter 1 percent hydrocortisone ointment to your regimen.
I hope that helps. Please do keep me posted on how you are doing or if you have any additional doubts.Warm regards.
Fordycee spots.Nothing to worry.