C.O.
S.:
That soft knot is most likely cancer or fatty globule which is resting or sitting on the nerve and muscle of the leg.
It could be an infection - it could be the dog was bit by something (tick, snake) when outside and now its infected.
The vet will most likely shave the area where the lump is to see it better. They may try to aspirate it to see WHAT it is. The vet will most likely do X-Rays as well to determine if something is broken or if it is cancer - how much it has spread, where it is. that's worst case scenario. best case? tick or some type of bite that is infected!
Good luck!