Capped Elbow

Caped elbow is the term for a swelling on the point of the elbow - soft and flabby when new, sometimes hard and fibrous when old. It's usually due to trauma, either from a shoe or hoof hitting the elbow. This can happe when a horse lies down for a nap while wearing caulked or weighted shoes, causing the shoe to come into contact with the horse's elbow.
A capped elbow is considered a blemish, not an unsoundness. It should not be painful, and it should not cause any lameness. The exception would be if there were some sort of infection involved, but in a case like that, the vet would notice the heat and pain (and lameness) immediately.

Treatment
The first treatment is to deal with the cause. If the horse's hooves or shoes need to be altered, that should be done immediately. If a cap is recent, your vet may be able to drain the fluid and medicate the area; if it is old, surgical removal of the hard, fibrous tissue is an option. Alternatively a corticosteroid injection, or a series of them, will reduce the cap.Your vet may recommend using a "doughnut roll", which is a thick, soft, padded tube that fastens around the fetlock like a bracelet. This keeps the hoof from touching the elbow when the horse lies down.