I have what is called Balanitis Xerotica Obliterans (BXO) aka Lichen Sclerosus (LS). The treatment includes steroidal cream but my dermatologist will only give me a little at a time because of the side effect of thinning skin. Here is a link. If you look in Table 1, Thinning of the skin is the #1 side effect of steroidal cream.
You are worrying way too much about this.
You only used it for one day. Thinning skin comes after prolonged use, not after one day. You shouldn't see any difference after using it for one day. You also won't see nerves - those are under several layers of skin.
Steroid creams/ointments are used all the time to treat different fungal infections in the groin. Most of the time, they aren't used for longer than a couple of weeks, and it's just fine.
You can have erections, masturbate, have sex, etc. I wonder if you are just hyper-aware of everything because of anxiety, and you are noticing sensations that you didn't before.
If you are a swimmer and wear tight suits, they make chafing products you might try. Google "anti chafing cream for swimmers" and you'll find a lot of different things.
But really, you can relax. I'm sure you're just fine.
Is this level of anxiety normal for you? If it is, you might want to talk to your doctor or a counselor about it.