Been there my dear... We had a similar set up for Meka, until she learned to jump the gate... So we've gotten a crate and have been doing great. Their crate should only be large enough for him to stand up and turn around. If he has room for a bed, then its way to big. I have the small plastic enclosed kind (not sure of the brand), but Meka does great. Keep in mind, you guys cant feed him, then place him in there... Your pup is going to need to potty within 45 min., so if you guys are gone for 2 hrs... yep, he's gonna do it. Its best to feed him early enough so that he has the time to go potty, prior to being put in there
In the morning, when I get up.. I let Meka out of her crate to use it, eat, play etc... When I leave, she goes in the crate and does fine until I get home at lunch to let her out. Also, maybe starting over with the pee pads, and placing them back in the original spot might be better. Meka too had re-gressed at one point and we had to start over. If he was doing good with them in one area, I wouldnt change it just yet...because it can really get messy...lol. It juse seems that once they are confused, your carpets with be the victim... Hope this helps