Rick - I don't think your coin would come back as "unauthentic," neither NGC or PCGS will put a coin in a holder if it is not real. I think they would put your coin in a holder that says "genuine," meaning the coin is authentic. Don is a much better source of information about the details grade - so I'll leave that part alone!
Your second question is about the damage - the short and simple answer is both? The nicks on the edge are considered damage, a very small nick may be OK but these are beyond that classification. The signs of environmental corrosion are also considered damage and can prevent a coin from getting a numerical grade. When talking about grading a coin, another factor to consider cleaning. You stated in your post that you cleaned the coin by scrubbing it with a tooth brush after soaking it in olive oil. The cleaning process can alter the natural surface of the coin and can be detected when a coin is submitted for grading.
These reasons (in my opinion) would prevent this coin from getting a numerical grade. If you want to know more about grading there are many good books on the subject. There are also many books and articles that deal specifically with the coin you found!
Pulling a 1909 S-VDB out of the ground in any condition is really awesome - and speaking generally your coin is in great shape for being in the ground for 100+ years. I mean - the odds of finding one of those in the ground are astronomically small. However, the world of coin grading has its own special rules - and generally speaking, coins with any king of damage (including: cuts; chips; large scratches; holes; improper cleaning; environmental damage; dipping; whizzing; and others) will not receive a numerical grade. I'm not a coin dealer or a grader, these are just my opinions.
Shawn