If the squirting doesn't work, I still wouldn't worry about it too much as long as the dog isn't being vicious, drawing blood, and the cat hasn't gone beyond playful taps. How I see it for my own is that it gives some excitement to my indoor cat's monotonous life. Staring out the window daily can only take her so far.
At first, once the cat accepted the new pup's presence, all my yorkie did was pounce on her, gave kisses, nudges with her face, and then paw at her like she does her toys and people. She wasn't sure how to play with the cat. At the breeder's home, she wasn't the last to leave and always had at least one littermate to play with in addition to romping with her biological mom. Her hyperness prompted the cat to nibble on the dog's ear to stop the hopping and pouncing and when she's had enough of the wrestling too. So now I attribute our dog's nibbling of the cat's ear as a lesson in play she had learned from the cat herself. Neither of them chews enough to puncture.
The times when our little girl is sitting in time-out on her pillow, the cat would try to instigate a chase. She'd run by her repeatedly, loudly, throwing her weight on the hard floors galloping. When that fails to get the chase going, the cat would walk up to the dog to see if she really won't come after her. Of course, our gentle soul of a kitty enjoys most a simple grooming back and forth or a bum licking service, but she's not beyond a good chase even with her weight gain.
The interaction between cats and dogs vary. Our cat worshipped our late laid-back old shihtzu while she looks at our yorkie very differently. It's just the way it is. I've been trying to teach her to "kiss kiss, no bite" but when I leave them well enough alone, neither of them ever goes too far. Our yorkie has been taught to stay out of the kitchen and she doesn't do stairs. So even without babygates, the cat can still escape the dog whether it be living on higher ground or running to the stairs or kitchen. Maybe consider keeping a room in the house a "cat" room? Just need to put up a babygate or something only the cat can get over/through and/or put up more kitty condos/trees around the house.
- The first picture is one of my favourite photographs and I bet that dog was trying to hump the male cat (my guess of sex from its build). Disclaimer: Photo taken off of a dogs "fail" site

. None of the animals in photo #1 are mine though the resemblance of the cat is uncanny.
- Pictures 2, 3 and 4 are of my cat and yorkie at play.