Did you put straight iodine on it? What concentration did it show on the label? Iodine can be very harsh and irritating to tissues.
If this spot has been there a year and hasn't been examined by your vet, it's time to have it done. This could be a chemical reaction, skin infection or even scar tissue but without a physical exam and likely some diagnostic testing your not going to know if you don't already. Your vet will likely do a skin scraping and possible a culture. He may also want to send off a small biopsy for histopathology to help determine what is going on. It really will depend on how worried you are and how far you want to go to find an answer.
Until your vet can examine it, you can clean the area with a bit of betadine (unless it causes swelling like the iodine) or chlorhexidine. And discontinue putting anything else on that area including fly spray. Make a list of all topical products you have applied in the past. One of the common things that causes spots like that is an allergic reaction to a topical product--fly spray being the ones I've seen most often cause it.
Licensed Veterinary Technician