Yes baby powder does help with skin chafing as it helps to keep sweat and moisture away from your skin which can lead to skin chafing.
You can also apply petroleum Jelly to your skin where your skins chafing as well and that too will help protect your skin from irritation and chafing.
Skin chafing is sometimes caused by things such as dried sweat, chemicals, dirt, and other debris on your skin so by keeping your skin clean and applying some baby powder or petroleum jelly you can help prevent skin irritation and skin chafing.
Another thing that helps with skin chafing is some Anti-Monkey Butt or body glide on your skin.