Arginine is in several topical diabetic commerical creams.

It is also in oral tablets, to improve circulation, which include some men's ED mixtures.

The problem with oral for you is that your toe may not get any from the blood, with the spastic capillaries. So topical would most likely be best to start with.

I personally think the magnesium is better, because it does 3 major things, and the arginine does only one.
So since you have the magnesium lotion already, I'd try that first.
You can then buy arginine later if you want. (it is not inexpensive).

Arginine has a down side. It is an amino acid viruses use to replicate with, and will stimulate the herpes family, when it is in a ratio with Lysine, that arginine overwhelms the lysine.
This means for people with Herpes Simplex, and/or Herpes Zoster (shingles), there can be activation of shingles which in itself will cause a painful neuropathy.

There are food lists on the web illustrating how Herpes can break out just based on dietary habits.
http://www.herpes.com/Nutrition.shtml

So if one takes alot of arginine it would be prudent to take some L-lysine with it. I've seen patients in the nursing homes given oral Arginine powdered supplements to help heal bedsores, and within a week, they are having shingles outbreaks.

So keeping attention to the diet, or taking extra lysine would be a good idea if you decide to use an arginine oral product. I think it is less of a risk for the cream versions, as long as they are applied only where needed to a small area.

Magnesium has 300 jobs in our biochemistry. When used properly it will basically do 3 things....
1) it reduces cramping in muscles
2) it blocks the NMDA receptor that is a major pain generator with PN
3) it opens up smooth muscle contraction, and hence improves
circulation to the tissue periphery

It also is involved in metabolism of essential fats we eat, and also helps with mitochondrial metabolism, and is a cofactor in synthesis of some neurotransmitters. It is lost in diabetics, and not absorbed properly when people use acid blocking drugs.
Studies have shown that up to 70% of people do not consume the basic RDA for magnesium in the US. So it is really a very critical mineral, and it would be much better for you to use it, and reap all of its benefits, than using just the arginine. In fact you can use both, just rotate them if you want. But you may not need the arginine at all if you do well on the magnesium.