Sounds like some brand of "bondo" that you are dealing with. If it is a single panel where the hole is and there is solid metal behind the hole you described, you may be able to strip it and the panel be ok. Likely the panel was bent at some point and the body repairman put some "plastic" on the panel to straighten the panel (hopefully that was the case instead of covering rust). These are assumptions based on what you are describing behind the hole.
The only way to be certain of what you have is to 'strip' the panel down to the bare metal and refinish it. If the panel isn't solid once you strip it, you may have to replace that panel which will require some cutting and welding. Without replacing a rusted panel or insuring that your panel is solid and repairing it correctly, you are likely just gonna continue to hide potential problems.
Hope this helps! Good Luck with it!
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