Ok, I know the difference between balanced and unbalanced.
What I don't know is:

1) how do you tell them apart once they are out of the
package if you get them mixed up?

2) in what circumstances should you never (or really try not
to) use one in lieu of the other?

Thanks!

If you are speaking of cables with 1/4" ends, a balanced cable will have a tip/ring/sleeve jack (ie, 2 black bands around the jack), where an unbalanced cable will have one black band around the jack.

Typically, unbalanced cables are used for guitars and basses. Most modern keyboards, mixers and effects can use one or the other, but it is best to check the equipment manuals to see if its output jacks are balanced or not and act accordingly.

To build on what Shelly said.

This picture below shos both types of Jack.

The top jack is a Stereo/Balanced (TRS Jack)
The bottom jack is an Mono/Unbalanced Jack
http://upload.wikimedia.org/wikipedia/commons/thumb/9/93/Jack_plug.png/400px-Jack_plug.png



Balanced Jacks can also be used for 'Insert' points on mixers.
For example:
I have compressors at work that we run into the inserts of our mixer.

The difference is with the wiring with these is that the tip is the send (signal going from the mixer to the compressors) and the ring is the return (signal from compressor returning to mixer to effect mix level)
The wiring for inserts on mixers varies so check in the manual.

I hope that makes sense and hasn't made things complicated.