EXTREMELY shy dog

Question
I have a 2 year old (estimate) dog from Taiwan, she is so timid. It has taken a year for her to be comfortable around me and allowing me to touch her.

Now her shyness is starting to become dangerous, if she hears a noise (pot fallingm wind chimes, phone ringing) she RUNS! If we're on a walk a loud car goes by and she riggles on the leash like a fish and tries to run. Skateboarders freak her out and well almost everything else.

She's okay with her stuff toys and LOVES to play, not too into food.

I'm trying to get her to associate good things and slowly make noise (low level jingle) and play toys, which is going okay but still if it's at full level she just RUNS.

She LOVES other dogs, just completely forgets her fears and has a great time.

What can I do to help her more?

Answer
A dog this is fearful or extremely low in social hierarchy (self perceived) won't be food motivated.  If sounds indoors frighten her and she "RUNS", ignore it.  This dog was most likely close to feral (from your report that it's taken a year for her to allow you to touch her).  She has never been in a household (before yours) or at least not habituated to one (perhaps confined or even tied outdoors).  When a dog verges on a feral start in life, it depends upon its senses in order to survive.  Unexpected sounds mean fight/flight response: no cognition involved.  SLOWLY (and I mean VERY SLOWLY) building new associations around (at first) low level interior sounds will help her to relax and learn that INDOORS these sounds pose no threat.  You CANNOT flood her (introduce many sounds) and you can't expect her to lose her innate response over night.  It might take another year or two for her to learn that phone ringing, wind chimes, etc. are not "threats".  Take DOWN the windchimes.  Put phone ringer on lowest setting.  If something falls or when phone rings, LAUGH and remain casual.  She will learn from YOUR response (as she begins to trust you more) that these interior sounds are harmless.  If you have a cell phone, put your house phone on lowest ring level and call it.  Have a succulent treat IN HER SIGHT so she knows it's there.  BEFORE your house phone rings, toss the treat at her.  She may at first refuse it as soon as the house phone sounds (hang up the cell phone so as not to cause more than 2 to 3 rings of the house phone).  But eventually, with random repetition over the course of weeks, she will learn that phone ringing equals succulent treat. It's important that the treat is available to her a MOMENT before the setup.  Slowly she will generalize the presence of the treat to the next event: phone ringing.  Very slowly.

Outdoors, use a strong body harness so she can't inadvertently back out of her collar.  Every time she reacts fearfully, back away from her.  YOUR reaction to HER fear might be contributing to the problem.  She will WANT to be closer to you.  The moment she approaches you, praise her and offer succulent treat (by succulent I mean: chicken, hot dog, cheese, not dog treats).  The MOMENT she turns to you, cognition is engaged.  IGNORE her and stay a few feet away until that moment occurs.  At first, this might take some time, but it will shorten the more you use the technique.  Don't deliberately go into heavily populated areas, that's flooding.  Stay in an area where few distractions will spontaneously occur and slowly transition to more heavily populated areas.  ALWAYS go to the end of the leash and wait calmly until she looks for you and returns to you, then reward.  AT first, she might not accept the food, but she will begin to expect its presence at her return to you and should then accept it.

STOP provoking fear by increasing level of sound.  Each time she runs, she learns more about reacting to her fear.  Don't "low level jingle" at full volume. Meanwhile, in isolated areas (start indoors) teach her to give you attention, as seen here:
http://www.youtube.com/watch?v=g8dC8-U1BT4&feature=more_related

This training, for THIS DOG, means an environment with NO sudden startling experience and it may take many repetitions (as many as 100) and lots of patience.  As soon as the dog is responding in this area, go to an area where there is a little bit more stimuli.  WHENEVER the dog reacts with fear, back away, wait for the dog to "remember" the "attention" it has learned: let the fight/flight response self extinguish, wait for the dog to come to you and make face to face contact, HEAVILY reward (all treats must be extraordinary, not simple dog treats).  VERY SLOWLY (over the course of months), the dog will learn NEW ASSOCIATIONS with the things that now evoke fight/flight.  She will come to TRUST you, seek you out with "attention" for reward.  DO NOT TEST THE DOG by bringing her places WHERE YOU KNOW SHE WILL FAIL.

Nicole Wilde's book, "Help for Your Fearful Dog" might be of some assistance.  But this particular dog has VERY GOOD REASONS for her fight/flight response, things we don't/can't know.  So progress will be quite slow and your efforts must be patient, consistent and calm.  At home, offer the same presentation: calm, consistent leadership.

Learn to read her body signals to try to "cut her off at the pass"...interrupt and engage cognition BEFORE fight/flight.  Try these sites:
http://veterinarynews.dvm360.com/dvm/article/articleDetail.jsp?id=94404
http://www.canis.no/rugaas/index.php

If you become adept at reading her body language, you'll be able to "interpret" her pre- fight/flight response and interrupt it with a special word.  This word has to be something you make up or never use under any other circumstance.  Stand in front of her (at home, in a quiet place) at random intervals, say the word, pop hot dog into her mouth, walk away.  Repeat randomly several times a day over the course of days.  If the dog is distracted by an unexpected sound, turn your back.  Wait for her to recover.  If she doesn't within a few minutes, walk away and try again.  The goal is to get the dog to respond to the special word with anticipation of high value reward.  After this is clearly acquired, ever single time you say this word (from across a room, might take some time) you can then read her body language outdoors and attempt to truncate the fight/flight reaction by using the word.  If it doesn't work, go back to square one indoors.  Eventually, if you're vigilant about body language, you will be able to engage cognition BEFORE full fight/flight response.

TIME and patience.