I also forgot to mention that there is now a bald spot that is about half an inch around the area as well.
Hello,
It looks like a cyst which can be sebaceous or pilar cyst(less likely). A sebaceous cyst is a closed sac occurring just under the skin which contains a "pasty" or "cheesy" looking substance called keratin. They may occur anywhere on body but scalp, ears, back, face, and upper arm, are common sites for sebaceous cysts. Blocked sebaceous glands, swollen hair follicles and excessive testosterone production will cause such cysts.
To confirm the diagnosis please get an evaluation done from a dermatologist.
It is very difficult to precisely confirm a diagnosis without examination and investigations and the answer is based on the medical information provided. For exact diagnosis, you are requested to consult your doctor. I sincerely hope that helps. Take care and please do keep me posted on how you are doing.