I know it has been a long time, but was wondering if you ever found out what was causing your jrt's problem. I hope you see this...
My jack russell has the same thing I see in your picture. She's almost 9 years old and was diagnosed in late 2009 with addison's disease We are managing that fairly well, but she is on prednisone long term and has lots of the typical side effects of that.
We went to the vet last week, and they threw out a few possibilities but no one seemed very sure. They said possibly a strained muscle or a few other things, but since my dog is regulary treated by the main vet there because of her addison's disease - I think they wanted to consult with her first. She was on vacation though and gets back tomorrow. We are supposed to go back and see her for her opinion as soon as she's back.
In the mean-time I have been looking online and this is the only thing I see even remotely close to what my dog has. The picture here looks EXACTLY like what she has, and she also doesnt seem bothered unless the area is touched.
I hope you see this comment after so long! Thanks :)
It could be any of the things that you described. My dachshund has had eight such growths removed - seven were fatty tumors, one was cancerous. They all looked the same. The only way to know for sure is to have a needle biopsy done then if it's cancer remove it ASAP. The faster it's removed, the faster you control the growth.
Don't wait - call your vet's office Monday and get him in.