That is growth known as callus. It always happens in this circumstance (layering) and generally precedes root formation. On the other hand, the formation of adventitious roots is not a sure thing. Some species simply won't do it. Also it frequently happens that trees that have achieved flowering/fruiting competence will no longer root.
In your pic, it appears that the callus on top may be connected with the callus below. If so, this 'bridging' of the girdle is a path for the auxin to continue down the tree. Since the accumulation of auxin is key to forming root tips, bridging is often the cause of ruin.
I suggest you cut off the callus below and remove any callus on the bare wood. Leave the upper callus alone as part of the de-differentiation of cells that is a precursor for roots has already been done (removing it and you start the whole process over again from ground zero).