I think you just need to be a calm, consistant and supportive presence for your puppy. 'Forcing' it to do something it's fearful of, usually doesn't lessen the fear. But giving in and letting the puppy quickly go to the bathroom and then immediately pull you back into the house is also not going to improve things for the pup.

My idea about picking the dog up is to prevent alot of the stress and decision making the puppy is currently making and putting it in your hands. And it's a proactive way to prevent some of the fear occuring. I know my pups find it calming and safe in my arm. Not once they are freaking out necessarily, but if they are in a more stable mode it keeps them calmer. And it's not about having the puppy 'get it's own way' because to do that, the pup would be back safe in the house.

Your puppy appears to be on the timid side and that may cause problems in the future. It's great you are working on this while the pup is so young. Have you read up on the stages of mental growth all puppies go thru their first year? Kind of gives us a framework of what is really going on and what we can do (or not) to help.

http://www.doberman.org/articles/puppy.htm

http://www.apbc.org.uk/article5.htm

http://www.vanerp.net/ilse/GSDINFO/understandyourpuppy.htm

There is also a forum for those with 'shy dogs' that you may want to look into to see if that is where your puppy fits http://www.goof.com/~pmurphy/shy-k9s-faq.html

Thanks so much for the great website references. I have read through them and see that a bit of gentle persuasion and a lot more exposure is in order, pronto.

Thanks to all for the great tips.