If you look at the Preta Part you will see that when he absorbs ninjustsu he lefts his back open. So i think that Madara can block every ninjutsu that his Rinnegan sees.
Did you saw Madara using that shield? NO. And the formed shield shields only in front of him. See the episode again. Madara was only standing and when he saw the Dust release coming it just disappeared (the Dust release). Thats how his Rinnegan works.
Watch this:
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From: 02:10 till 02:30 and you will see how he uses it.
i doubt it absorbs ninjutsu as much as it absorbs chakra it comes into contact with. and ninjutsu attacks are baised of chakra being molded and released.