I currently work 1-1 with students so I am able to have a conversation with each student at the first lesson that includes discussing goals and expectations, prior knowledge, and understanding of the curriculum.
For a full classroom situation, presenting a survey would be a good way to gather this information for a pre-assessment. There are open ended questions, and multiple choice. With this knowledge, I could group students by their knowledge of the subject and their interests.

This Pre-Assessment Diagram shows how I would differentiate strategies and assessments based on the following three groupings:
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1. the 5 students who answered most, including the most difficult, of the pre-assessment questions correctly
2. the 12 students who have some knowledge about the topic as shown in their score, but need to develop higher order thinking skills
3. the 5 students who appear to have limited knowledge about the topic, of which 3 are struggling with language and are at different reading levels and 2 students who have little to no comprehension of the the topic and need to be tested further for special needs

For tracking student progress, I currently use a curriculum map for each individual student. As students accomplish a task from a learning objective, they get a sticker for that task. Once a student has collected all, or most stickers for his or her level, then I move on to the next level. You can see my curriculum maps on my studio website

For the full classroom, I can still use a curriculum map. It has been modified for General Music Education. Also, plan to group students by their general knowledge and track the group's progress rather than tracking each individual student.