My Sandy is also a rescue and when she first came home she had a couple of issues with nipping, but now is fine. I enrolled in an obedience class with her and I really believe that helped further establish a relationship between her and the family.
My children aren't allowed to pick up any dog (I'm a strict Mommy) -- but some of their friends' parents would let them get right up in Sandy's face if I didn't come between them. Sandy isn't okay with other peoples' children so I have to keep her with me AT ALL TIMES when other kids are around. She came from a home with big dogs (she was bit) and there were also small children around. Although I was never told of any incidents with the smaller children, I can't help but think there was one because of her behavior.
Give some time for Duke to bond to you and realize he will not be mistreated and will ALWAYS be fed
He will come around, I'm sure!
Hope this helps a little.