Does sound like some type of cyst with clear fluid coming out. Lots of times I encounter a fatty pasty type of material which would be a sebaceous cyst.
Typically unless you extract the inner lining of the cyst it will close over and continue to refill. Did you vet extract the lining when he/she put kitty on antibiotics?
While I cannot be privvy to your vet's thinking as I did not examine your cat, the only advice I can give you is to get a second opinion (go by and pick up your medical records for this - and NOT only shot records, get the medical notes as this should have what the vet found). If this truly is a cyst it will recur if you do not remove the lining. Sometimes this does not even require anesthesia (I removed my cat's without any).
What exactly did he see on aspiration?
As for the antibiotics, yes, they can cause diarrhea. It's important to give with food. I would not stop them, but you can skip a few doses and see what happens with your cat's stool. If the diarrhea continues even with food, you need to switch types. As for topical, you can use neosporin but it may not help very much.
Let me know if you need anything else.