Hi Chenguang
As such the hydrogen does not have any direct effect on the PDF. The main issue with hydrogen is the large incoherent scattering cross section of hydrogen which lowers your signal-to-noise and gives you a massive background from incoherent diffuse scattering which does not carry any information.You have to correct for the background, because if you do not then your PDF will just be a a series of rapid oscillations and you cannot extract any information from it. Correction can either be done using NOMADs own data reduction program or by using PDFgetN3. You cannot do anything about the extra noise, except you might have to play around with your Qmax in the Fourier transform.
If you can make the necessary correction and get a dataset with a good enough signal-to-noise ratio, then the PDF will show interatomic distances containing hydrogen. Hydrogen is a bit special that it has a negative coherent scattering length which gives rise to negative peaks in the PDF. Since the bond lengths between hydrogen and other atoms are very short, the presence of hydrogen is easily seen from a negative peak around 1 Å.
So in short if you can correct for background, then there is absolutely no problem having hydrogen in you sample and you can still extract structural information.
If you are worried about the fit that you have attached, then it looks like you have an extra phase in your sample. Remember with neutrons then light atoms, such as C, is very visible. It could be an electrolyte or binder for example. Your PDF also seem somewhat noisy, maybe you need to adjust your Qmax.
Hope it helps. Mikkel