I'm sorry about your girl.
Some small dogs can do very well without surgery. It can take a long time for it to heal though. I'd be doing the same thing in this case if my vet thought it was okay to do so. IMO, it's perfectly fine for her to hang out with you during the day as long as you are holding her/have her harness so you know she can't run/jump. Other than that, it is really best to crate her (or even a playpen/xpen. One slip up before crate rest is over can set her way back.
Non-steroidal anti-inflammatories are great drugs, but maybe not so much for dogs with kidney problems. Kidney disease can cause a loss of appetite. So if she stopped eating as soon as it tore, I'd think maybe it's pain. But if she stopped eating after starting the drug, then I would have to wonder if it's just too much for her to process. There are other options available. They may not be as good, but might be safer for her. It would be worth talking to your vet about. Make sure they know she isn't eating because they do need to know this in case it is because of her kidneys.