Hi! Diesel is cutie! I didn't crate train either. I was going to though. There's nothing wrong with it.
I ended up using an exercise pen. I put her bed in it an water and wee wee pads. Once I got Lucy on MY schedule, it was easier to train.
12 week old puppies LOVE to sleep. It's not unusual. You have to make sure he's eating some though. My breeder suggested that I mix a little Ceasar soft food in with the kibble. Really coat the dry food. That way, he'll eat something.
As soon as he adjusts to eating 2x per day, you can stop mixing the wet stuff in. If he eats only a little bit in the morning, he'll chomp down at dinner.
Yorkies are smart. They'll try to work you over all the time. You can't let Diesel make the rules.
My Lucy is 6 mos. She's restricted to my kitchen during the day. She sleeps with me at night. I keep her crate in my room. She's been having some loose stool lately, so she had to sleep secured in her crate last night. She didn't love it, but as long as she could see me, she was OK.
I'm training Lucy to go only outside. She's really getting it! Consistency is the key. Also understanding YOUR puppy's signs and signals. Lucy will go up to the baby gate that keeps her in the kitchen and circle around. She makes sure I see her. If I don't pick up the signal that she has to go, then she'll just piddle right there. That's my fault.
Also, if your puppy is laying down for a long period and you begin playing - rest assured, he'll need to go. If he starts scratching furiously at his bedding, he has to go (or may have gone already.) It takes a little time to learn what your puppy is trying to tell you.
Make a HUGE fuss when he goes outside. Be patient. Expect mistakes.
Was Diesel bathed recently? Yorkies need special shampoo that must be rinsed, rinsed and rinsed again! Anything remaining on the fur or skin can irritate. With a little boy, if he had fleas, you can see them hanging around his privates. That's one of the best places to check.
I hope I helped you with some of your questions.
Best wishes, Tracey