Rita, I understand that bacterial soft rot (stinks like a rotten potato) can be caused by a combination of heat and moisture, and lots of nitrogen is really bad for iris because it promotes bacterial soft rot. And I suspect that's what you have since it's happening in warmer weather. That is why I never fertilize my iris in summer (only in early spring and in the fall), I only use a fertilizer that has a low nitrogen number (first number of the three), and I really watch everything after I water and make sure there is no standing water around my iris. And, of course, I'm helped out there because it never seems to rain here in the summer -- although if it rained more it would probably be cooler...
Anyway, try to clean them out and get rid of it (I just get my good old thumb in there and scoop the goo out--yuck!) and expose the bad spots to sunlight if you can -- and you can squeeze SoftSoap into the spots or even pour cleanser on them. Some people dig up the rhizomes and lay them in the sun for a couple of days to help, or you could do both if you want. I had a lot of trouble with rot when I was a newbie with iris and didn't understand about the heat/moisture/nitrogen thing, but now I rarely have a problem and when I do I break out the SoftSoap!
I suspect the rot has more to do with the fact that it was a vegetable garden and you've amended the soil quite a bit and there's probably a lot of nitrogen buildup there. How deeply do you bury the rhizomes? You might want to just practically plop them on top through the summer and then mound dirt up over them for the winter -- I'm certainly not an expert here, but that might work.
