It sounds like your dog has a possible skin dermatitis such as a yeast or staph infection.
These skin conditions are generally seen with allergies. Staph usually occurs on the lower regions of your pet and tends to have small pimple type bumps. Shampoo containing Chlorhexiderm and/or Oatmeal can help with this condition. Yeast typically shows as a greasy area that has a sweet musty odor. Sometimes the skin can become inflamed, darker and thickened due to itching. Yeast likes areas such as between toes, armpits and ears. Selsun Blue Shampoo can help with Yeast dermatitis. When shampooing, lather and leave on 15 minutes before rinsing. These shampoos are not meant to be a cure, just a relief until your pet can see a Vet. Benadryl can be given to your dog, the dose is up to 2mg per pound every 8 hours for itching due to allergies.
You can read about allergies here: http://www.vcahospitals.com/main/pet-health-information/article/animal-health/allergy-general-in-dogs/428
Here is a site that goes over itching in dogs.
now the growth might be an abscess which can occur when a puncture wound gets bacteria under the skin and heals on the surface while the bacteria multiplies under the skin. It might also be a fatty cyst or a tumor. Your vet will likely drain it if it is an abscess and prescribe antibiotics. If it is not an abscess then he will likely do a fine needle aspiration to check the cells and determine if it is benign or not. You can read more on abscesses here:
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