Inspect the area that has the nail pop. If the paint has peeled and cracked on top of the nail, or if loose joint compound is over the nail, carefully cut off the top layer with the utility knife.
Inspect the nail. If it's loose, it most likely isn't gripping a stud and should be removed with the claw end of the hammer. If the nail is tight but simply protruding, place the nail set on the head of the nail and strike it with light force from the hammer. The head of the nail should be countersunk so it's not sticking out of the drywall. Don't hammer it in so far that it breaks through the paper on the front of the drywall.
Put some joint compound on the tip of the 4-inch putty knife and apply it over the affected area. Apply enough pressure to the putty knife so you force joint compound into all areas of the indentation where the nail is countersunk. Allow the joint compound to dry.
Sand the patched area with the fine-grit sanding sponge, then inspect the area to see if it's smooth. A good way to test this is to close your eyes and run your fingers over the patched section. You should feel no bumps or ridges on the wall. If you do, sand the area again until you get the desired result.