you don't say what the material is that has a hole in it. Great Stuff works well usually. Let it dry completely (for like a day or two). Hack saw blade (no saw) cuts off excess flush with surface. May want to push in filler to create a dent to allow for cap/finish agent. Spackle/skim over with your favorite skimming agent (something that matches existing surface). I have used vinyl spackling for smooth stuff and sanded, cementicious products for stucco and rock, I'ved used Bondo, Durham's Rock Hard...etc., etc. Great stuff is your insulator and filler then you just need to skim/cap/finish it then paint it.
Yes, you can and should sand latex if you are painting over it. You cannot expect the next coat of paint to grip if it doesn't have a roughed surface to grip to. Painting a glossy or glazed surface is like painting glass - it has no adhesion and will lift right up.
Fresh latex is hard to sand because it hasn't cured yet. You have to wait it out. If it won't sand, it's definitely too soon to overcoat it with anything but itself. (and on that, check the cans for recoat rules). You really need to leave decent curing time between dissimilar products - especially oil over latex.
There is no such thing as paint-primer. Paint companies tell you that to take your money. Their marketing claim is based on painting surfaces which are close to ideal - that is to say, well prepared and primed, with no material variations.
By "material variations" I mean material, color, porosity, chemical differences, anything which might "print through" because the topcoat reacts differently to it. I'm not referring to physical roughness like brush stipple or high spots. The purpose of primer is to bind to the underlying surfaces no matter what they are, seal them, and make them "equal" to the topcoat, so the topcoat applies uniformly and reflects exactly the physical terrain, without visible glitches for any other reason.
Done right, you will not see where wood meets marble, an area was previously painted, or where a cat peed on bare drywall.
You also need to remove surface contaminants which would foul the primer (oil, acids) or prevent adhesion (wax, silicones, linseed oil). In machinery paint, that's the classic 2-cloth wipedown with solvent. Water is a solvent, but too many contaminants are immune to it, so you need to use a chemical solvent or strong soaps, e.g. the classic TSP. You need to get the soap residue off.
Invariably when paint fails, somebody skipped one of these steps.
Why are the oil brush strokes still visible? Is this contamination like acid which is fouling each layer? (remove it). Or is it physical irregularity/bumps (sand it down). A build primer is specifically meant to be sanded. It will leave brush stipple marks far more than a topcoat will, but it's easy to sand.
Best Answer
Muralo's Spackle™ shrinks as it dries. If you keep applying thin layers and letting them dry, you will eventually achieve a flat surface. If the Spackle is proud of the surrounding surface you should be able to sand it flat.