Since the smell is foul, it suggests an infection, and since it's by a hair follicle, it seems like perhaps the hair follicle got infected, something that happened to my husband once. We were in Italy at the time and went to a pharmacist (they are sort of halfway to doctors there), who diagnosed the infection and gave him a cream to use. I assume it contained some kind of sulfa drug or antibiotic or possibly something for yeast, who knows? but it did the trick.
In your shoes I would see your g.p. or a dermatologist and get properly diagnosed. You don't want there to be a growing problem.
Also, it's not a cyst-like lump, it's internally. When I touch the spot where the hair grows, that's the only time I can feel the lump.