How can a general surgeon know if a mass on the midline upper back is lipoma or old muscle just by feeling it? can an ultrasound determine which?

Depends on: the case, but usually yes. Ultrasound maybe. Better test is MR, but it might not be necessary, because an experienced surgeon can usually tell. But a lot depends on size, consistency, age, onset, etc. Ask for a second opinion if you are uncomfortable with first surgeon's opinion.

Dicey: It's kind of hard to tell just what a lump is sometimes, the best thing is to remove it, especially if it's causing pain. An MRI would probably be the best test to confirm a mass is a lipoma rather than an ultrasound, but this really isn't needed, I would just have it removed unless there is some other concern.