You say a prescription for estrogen seemed to increase your libido at first, but that effect has diminished. No, you haven't become immune to estrogen. Unfortunately, libido is a bigger and more complicated issue than just one hormone. Many women don't find any improvement in libido with estrogen; I tell patients it certainly won't make it worse, and it may make it somewhat better. And it's not uncommon for the initial effect perceived from a new treatment to wane over time.
You also ask whether where you apply the estrogen cream makes a difference to its effect on your libido. The medical answer is that because its effect depends on its entering the blood stream, it can be applied to skin anywhere it is likely to be absorbed. If you have pain with intercourse or dryness because of menopause, applying the cream to genital tissues may help, but that's a different issue than libido.
Women's libido is complicated (several hormones and numerous neurotransmitters in the brain are involved, as well as emotional and psychological factors), and the treatment options for low libido are currently limited. We offer a number of suggestions on our website, but I also encourage women to talk frankly with a menopause care specialist.