Every so often a small pile of dust will appear in one spot below my large sectional. I hear something scratching/chewing the wood late at night in this area so I know something is there. The sound is quite loud because today I heard it over the TV playing. I feel and it is one singular sound. Today, a 3/8" hole appeared above the pile and I think I saw a fat worm like flesh colored think in the hole but it disappeared when I had returned with a tweezers. What is it?

Sounds like you have mice. No bug that I know of would make a noise you could actually hear.

Probably this:

Wood-Boring Beetles in Homes Management Guidelines--UC IPM (http://www.ipm.ucdavis.edu/PMG/PESTNOTES/pn7418.html)

Old house or post beetles do make a slight crunching sound and leave piles of very small dust sawdust.

If the sofa is less than a year old, the possibility of a carpenter bee larva exists. If it was manufactured longer than a year, likely it's an old house borer beetle.

ENY-266/IG119: Powderpost Beetles and Other Wood-Infesting Insects (http://edis.ifas.ufl.edu/ig119)

Unless you can find someone with a really big oven to heat that section of the sofa to 130 degrees for 4 hours or an exterminator with a large fumigation vault you're probably going to need a new sofa.