I'm fairly certain that this is not exactly what was meant in the song, but according to "The Dictionary of the American West" by Winfred Blevins, Salty Dog refers to "Anyone who's really good at his work....Also, according to other sources, a tough fellow (salty bacon or ham). Salty means 'full of spirit and fight.' When said of a hand, it's a compliment. But a horse that's salty may be mean."