Hi, when you squeeze it, does a clear liquid come out or is it more like whitish, pasty substance? Because from what you describe, it sounds like a sebaceous cyst. Sebaceous cysts run deep, and have sebum and other things trapped inside a 'capsule' which if drained out, smells extremely bad, but refills quickly again. Only way to get rid of it completely is to get the whole capsule or container removed through a small and uncomplicated surgical procedure involving stitches.
The cyst also grows over time to form lumps and a lot of times they get infected as well.
Hope this helps!