No, it would've been legal tender, right up to the recoinage in William III's reign.
After Elizabeth's reign all shillings were produced with XII in the fields, maybe to rectify the possible confusion that unmarked coins had had in Elizabeth's reign? So my theory is people began marking the 'unmarked' Elizabeth shillings with an X to ease identification, especially many decades later when people had gotten very much used to the XII coins. You have to remember, with clipping, worn sixpences, and unmarked Elizabeth groats, it probably wasn't easy for a lot of people.
Holed? My guess is a piece of jewellery, maybe contemporary? In the 17th century, as today, there was great respect for Elizabeth so, even though the coin was still valid currency at the time, it was starting to become an antique. An old hammered coin around your neck, when milled coinage was now the norm, which you could still spend in an emergency (a credit card), must have had appeal?