Please help! The other day I found this orangish-looking shell on the trunk of my dogwood tree. I poked a little hole in it with a stick to see if it was bugs. It looked like dirt underneath this shell like growth. I've inspected the tree. So far the orange blobs are only in this one spot. What should I do? Is this fatal? Thanks for your help!

I think the tree has a fungus infection. I don't know exactly what it is, but the growth on the tree trunk is called a shelf fungus, bracket fungus, or conk. It is only the visible part of the fungus, the heart of the tree is infected. These infections are usually not treatable and will most likely eventually kill the tree. If it is a particularly valuable specimen tree, you might want to consult a licensed arborist, see if they have any suggestions. (I'm hoping I'm wrong!)
Here is a link to some information about one type of conk. I don't know if this if what your tree has, but the information generally applies to other kinds as well.
https://www.missouribotanicalg...

Sad news indeed. There are three trunks on this tree. Could I save the tree by cutting down the two trunks that are infected? If I eliminate the tree, can it be replaced with something else? If so, do I need to wait a few years? This tree is very close to some hydrangeas. Can they become infected with this?

I'm sorry, but I don't know enough about this to even begin answering your questions. (Good questions, by the way!) You might try contacting your local county Cooperative Extension Office, or a licensed arborist. Some of these fungi may be present and persistent in the soil. Some plants seem to be more resistant. Sorry but I don't have specific answers for your situation.