Dropsy is one of the more mysterious diseases of the aquatic world. It is not known to be contagious, nor is it usually treatable. It stems from an issue with the gills or kidneys of fish that results in the build-up of fluid in the body cavity. This can happen for any number of reasons, including a pathogen, a genetic deformity or even just poor water conditions. There are stories of fish recovering from this condition, but those are few and far between.
Dropsy can be distinguished from other forms of bloating by its distinct tendency to make the scales raise in what is known as “pineconing”, because of its similarity to the shape of a pinecone. By the time the scales rise, it's too late to be able to do much. Euthanasia might be the best course of action.
There is no effective treatment for dropsy, as the causes can be near impossible to determine without a necropsy. Usually, dropsy is a result of under-filtering a tank or under maintaining a tank. These together cause a large amount of stress, and kidneys just don't like stress. Higher levels of toxins in the water will also lead to kidney failure. The best treatment is prevention, as dropsy appears to be preventable to a large degree.