Looks like you've got a couple of things going on here, some kind of chewing insect or even slug/snail and Nematodes, which accounts for the cauliflower appearance near and on the petiole.
These microscopic worms like poor soil and dislike humus, where predatory fungi live. Try beefing up your soil with leaf mold and humus and reseed or replant.
As for the chomper, I suggest a midnight raid to catch whatever in the act and *squish*
For slugs and snails, beer traps really do work. They are also eaten by firefly and soldier beetle larvae.

That's nice. After researching, I added nematodes to my garden to get rid of grubs. Then why are only some of my plants like this?

there are something like millions of nems in a shovelful of soil

and a million different kinds...

you cannot equate the answer.. with whatever kind you applied ...

there are also in the plant nems.. and in the soil nems ... the ones you put on the soil.. are not the ones in the plant ...

ken

Leafhead, could you explain further about the connection between nematodes and that crusty growth on the pepper? I assume that you are talking about a foliar parasitic nematode. I've seen leaf damage attributed to foliar nemas, but nothing like this. Educate us!

Blackthumb, does that icky stuff come off or is it actually growing into the tissue? If it comes off, I'll suggest that it is harmless slime mold, something we've seen a heck of a lot of this season. If it is actually part of the plant, I don't know. There are assorted galls and hopefully Leafhead will come back with more information about the nematodes.

Also, there are many, many different kinds of nematodes. There are those that parasitize beetle grubs or fleas or whatever. That's all they do. Then there is a group of plant parasitic nematodes which can cause many kinds of problems...stunting, leaf damage, wilt, chlorosis, and even death.

Does this make sense?

They are apart of the plant. It's almost hard as a rock. This is what I bought that was supposed to help my garden (link below).

Here is a link that might be useful: Link to nematodes