What is his exercise level like? You might just need to jog the Devil out of him before you leave him by himself.
Housebreaking sucks. I had a Siberian Husky who never fully housebroke and she left
devastating piles and lakes of pee in her wake. She also destroyed $1,000 dollars worth of lawn furniture. I had to take up sprint running just to keep her baseline psychotic.
If you are having problems training him to the pee pad inside, I would try housebreaking him to go outside. Maybe the pee pads are confusing him to the point that he thinks every place in the house is good to go on. Making him go to the bathroom outside may help define the difference between where he can go and where he can't.
Try leaving a Kong in his pen when you leave him. I recommend that he be x-penned and not crated, simply because he sounds like a mill puppy that has gotten used to sleeping in his own excrement. I think training him not to do that would be particularly difficult, considering it was an issue with his previous owner as well.
I recommend the book
Surviving Your Dog's Adolescence, by Carol Lea Benjamin. It's a really, really good book for people dealing with the psycho teenage years of their dogs. I learned a lot from it.
Worst case scenario, if you must give him up, you will have less regrets and feel less guilt if you feel like you did the best that you could with trying to train him. Sometimes between hectic circumstances and a troubled past, it just doesn't work out. Given your situation, you may just not have the energy or the time to commit to work out Teddy's problems. There may be someone out there better suited.
But I urge you to at least give it a shot. You will probably feel intense guilt if you don't think you did the very best that you could for him. It sounds like you love him very much.
And if you decide to rehome him, please do not put him in a "Free to good home" ad. Labratories take unwanted pets through these ads and use them for animal research and vivisection. Try Yorkie Rescue or a local humane society. Also be honest with people about his problems. This ensures that he will get a new owner with the experience necessary to rehome him permanently.
Good luck! Keep us posted!
