Plumber,
The oil is fine. It will rust, but so will lots of hunting equipment. It just takes a little maintenance like you're doing. As for the problem of not holding an edge, I cant say much to that. For a knife to be very useful it has to hold an edge reasonably well. Nothing magic about it. It depends on three things: the steel, the heat treat, and the edge geometry. You called it home made which is not a bad thing. But some home made knives are better than others. One of those three elements might be less than perfect.