The puppy is a baby and doesn't know better yet - Cheri did the same thing to Chanel who is 2 years older - I spent alot of time holding Chanel to save her from the evil biting puppy lol - but they DO Grow out of it.....
Cheri loved to grab Chanels braid and hang on while chanel was running lol - they worked it out and once Cheri got a little older they play very very well together - no more biting. It's a puppy thing.
I'd try to pay lots of attention to your older girl - and get that hair up if you can -
here's a picture of what Chanel had to deal with

you can SEE who is getting the rough treatment

the baby had a blast and she was just lucky Chanel didn't kick her little puppy butt lol -
The pictures are named OUCH #1 and OUCH #2