Removing an unwanted finishing nail, without doing damage to the wood surrounding it, can be a bit of a challenge. There is a way to accomplish it, which involves making a tool just for that purpose.
Start with a pair of old diagonal cutters. The idea is to remove the bevel on the back side of the tool.
Use a belt sander to grind away some of the material from the back of the cutters.
It's also helpful to grind the sides to form a point at the end of the cutters.
After sanding, the back of the cutters should be virtually flat.
Place the sharp, pointed ends on either side of the nail. Push them slightly into the wood, then squeeze the handles and grip the nail right below the head.
Repeatedly rock the cutter back and re-grip the nail to pull it out of the wood.
Use a piece of scrap wood to increase the range of motion if necessary.
With the nail removed, all that remains is a clean hole that's a snap to fill.