Dropsy is basically a build up of fluids in the visceral cavity (which contains the stomach, intestines, gall bladder, and kidney).
You can relate it to getting a cold. When your sick, your various lymph glands around the body retain excess amounts of fluid, for instance just under your neck. But having this excess fluid isn't the problem, your cold is.
Same thing in fish. It's just your fish trying to fight off another disease... don't worry about the dropsy, worry about whatever else is causing your oscar to act like this.
I suspect the real problem is the fungus, therefore.
tim