I, personally, have met very few people who have had potty training success with pee pads. He is probably confused on where he is actually supposed to go to the bathroom since you leave a pee pad down but also take him out frequently. You can't blame him for tearing up the pee pad . . . he probably thinks it's a toy!
I have 5 dogs and I truly believe that I have perfected the art of potty training. I have potty trained each and every one of my dogs by crate training and following this schedule:
http://www.darnfar.com/Dog%20Tra...ng_a_puppy.htm
The key is to getting a crate that is only big enough for them to stand up, turn around, and lay down. When they are laying down, the whole floor of the crate should be covered by their body. If you buy the smallest crate and it is still too big, you can put a box in the back of it. That is how I potty trained all of my dogs and they were all potty trained within a month. After they are potty trained, you can take the box out of the crate or buy a bigger crate that is more comfortable but it is essential to have the proper size crate while crate training/potty training.