Got this from another forum but sound advice.
Iron will often VDI erratically because of its decomposition. As it rusts, bits of material flake off and become individual targets which can often be moved away from the main mass due to any number of reasons, including ground heaving, plowing, etc. These small bits, when "clustered" will "look like" a bigger target if enough are under the coil at the same time, but can result in the "chatter" one sometimes sees in this situation. As you start to dig and disburse the bits, the target return becomes weaker and more erratic around the center mass.
Large iron masses can cause "wrap-around". This occurs when the target is large enough to cause a VDI that is so negative that it "wraps" into the positive VDI region and is reported as a high conductive target by the detector. Generally, the "give-away" for this condition is a dropout in threshold tone as your coil approaches the target.
Keeping a little iron in the accepted VDI range is a sound practice as it aids in "un-masking" a smaller good target next to a larger piece of ferrous material. (Adjacent target masking). This is especially important for "Silent Search" units because the unit's audio will already be triggered, and you will often hear the weaker, secondary sound of the good target that might have otherwise been unable to overcome the threshold necessary to trigger the audio due to masking.
To effective deal with iron a high fidelity ground balance is necessary. Remember that the detector operates on the composite signal that it receives from the coil. Composite signal = (Target return + Ground Return). (We'll disregard EMI for purposes of this discussion). Because iron = ferrous = negative VDI, and because ferrous mineralizaton = negative VDI, if you don't have the ground signal eliminated, it will exacerbate the effects of the iron targets. In other words, you'll have ferrous soil + ferrous targets adding to make a "larger" ferrous signal to deal with. And of course, having the additional ferrous ground return not fully eliminated will result in masking smaller conductive targets by "dragging" the resultant composite VDI down into the negative range. EG: A small gold chain that would VDI at +3 to +6 with a good ground balance might be missed completely because it got "pulled down" into the negative range. Again, the reason to keep a bit of iron accepted in your normal C&J setup.
At the end of the day, dealing with iron is just another "opportunity to excel". You can learn how various sizes and physical conditions of iron respond under various soil conditions, and then use that knowledge to your advantage when setting up your discrimination and when afield.