Re: Hunting a 1800's bar site
clad-magnet, congratz on the old coins. We CA guys envy you east coast guys .......... where large cents just ooze up from the ground everywhere it seems
To answer your question: yes iron will mask conductive targets. When you knock out iron (nails, etc..) with your disc, then your machine might mask a conductive target beneath a nail(s), scrap iron, etc.... Will depend on the size of the iron verses the size of the conductive target beneath. Sometimes if the nail is not too big, or not exactly "on top" of the conductive target (so you still get a "peak"), then you can eak out targets from in and around iron.
Some machines "see through" iron (ie.: "average targets") better than other machines. The 250 is not known to excell in this arena. You will indeed mask (get a reject signal) if even a modest nail is squarely over a coin (or get signals that are FAR from good anyhow, as the machine struggles to decide). Other machines, like various Tesoro 2-filter machines (silver sabre, bandido, etc...) do much better in this department, IMHO.
You can certainly dig out all the iron, to attempt to see what's underneath. But this may be impossible in some ruinsy sites, as you'd go crazy with a million targets. Just turn your disc. down to it's lowest setting (so that you're still getting small foil, but *just* enough to knock out individual nails). The lower you have it, the better you'll do in the averaging ability.
But based on the finds your making, if I was you, I'd invest in something better for iron-infested sites. A single nice seated coin, or some rare saloon tokens, would pay for it. And if the targets aren't necessarily too deep (ie.: it's not a lush vegetation site, and more resembles hardpan surface), then a Compass 77b will do even better yet. You can lay up to 3 nails over a coin, and sill get a positive hit on something conductive beneath the nails. However your depth would drop to only 3" or so.