Using the flat face of the hammer up against the dolly makes the metal thinner, which is why the dent won't go away. You need to shrink the excess metal so using the pick end of the hammer against the dolly would be a better plan.

Use a very light touch with the hammer and keep the dolly pressed up against the work area.

I'm no body working pro, but I have good luck removing door dings and such using this method.