Hi Deb,
I would try Modified Xue Fu Zhu Yu Tang for this dog. It is a Blood and Liver Qi mover, yet has the turmeric in hit to reduce inflammation. It is also a Blood tonic, which might help the dog's Shen, anxiety and obsession with the area.
To support the mXFZYT, I would also use Xiao Chai Hu Tang at the same time. It will further reduce the stress the animal is experiencing, and enhance the flow of blood to the lesion that the mXFZYT is promoting, so the problem can be actively resolved.
Lastly, I would wonder about applying some topical essential oils. I find them very useful for drawing out infections (which almost always are inside these granulomas) as well as breaking down the granuloma itself (since they function as topical blood movers). In Canada we use a product called Cothivet. It's ingredients include the following, in case you want to make your own mixture: Centella asiatica mother tincture 89.50%; Lavender officinalis natural essential oil; Rosemary officinalis natural essential oil; Aesculus hippocastanum mother tincture; Thyme officinalis natural essential oil; Cypress officinalis essential oil; Medicago sativa mother tincture
Try some or all of those topically while using the herbs orally. Alternatively, you can take Xian Fang Huo Ming Yin granules and mix 10g or so in a few ounces of ointment, and apply it topically. Try to use a Calendula-based salve, since it will help to break down the induration. Apply it once or twice a day.
Hopefully after just a few days to a week of this approach, the lesion will look dramatically better. Let us know how it goes!
Steve