I have only used it so far doing my own acrylic nails and to shorten my labs nails so I'm very inexperienced with most of the other bits and pieces to it.

I recently bought this bust http://www.firemountaingems.com/details.asp?PN=H201309PK and the space between the earlobe and neck is too close to put an earring through without mangling the earwire.  I was hoping someone here would be experienced enough to recommned which bit to use on polystyrene to scoop out some space on the neck behind the earlobe.  I dont want to darken the area and ruin the bust so of course I would practice on the back first but I dont have a clue where to start as far as which bit.  Any help would be appreciated.

I would suggest something in the 100 series of bits on a lower speed. I cannot say exactly which bit. I don't want to advise one that is too wide or too narrow. You should be able to determine the right one when you go shopping.