What started out as what i thought was dandruff,now looks and feels like a scab. i don't pick at it, but it seems like it wont heal it also smells.

See dermatologist: Any non-healing skin sore needs professional attention. Odor suggests infection, but that might not be the only problem; infection can accompany other problems. There are several possibilities for this sort of thing, some of them serious, including skin cancer. So don't mess around with it; see a doctor soon, preferably a dermatologist.