Black Lab puppy not grasping potty training

Question
Hello, my sister recently adopted a 7-week-old Black Lab puppy named Inca. We've had her for nearly a week now, but my sister has been shirking her responsibilities as caretaker so I've kind of unofficially taken responsibility of caring for her. We live in the same household, and training is not going well. Inca pees and defecates all over the house but will not relieve herself outside. I've tried placing objects she's peed on outside but she still doesn't seem to take the hint. Even after she just gets back from a walk, she will wait until she gets back inside to go to the bathroom.

In addition to that, she prefers chewing on toes and legs over her own chew toys. We've tried soft toys, hard toys, rubber toys... she will be interested in them for a few minutes at most and then go back to chewing on people.

My sister is frustrated and threatens to get rid of Inca every time she finds a mess on the floor. I try explaining to her that she's only 7 weeks old and she just doesn't understand what we expect her to do. Inca has a wonderful, friendly personality when she's not getting into trouble and I know she'll make a good companion once she's trained, and I've decided to step forward and take the situation into my own hands, or it's not going to get any better.

Thanks in advance for your help.

Answer
Here's a good article on house training: http://www.clickersolutions.com/articles/2001/housetrain.htm
The key is constant supervision when puppy is indoors, and out of her crate.  Also, if someone has been scolding the puppy for accidents, that may be part of the reason she doesn't "go" when on a leash outdoors.  She may have learned to be afraid to eliminate in front of the human!  So, stop any scolding if that has been happening.
As to the chewing, it's normal, but you can discourage her from chewing on your hands by going still, or yelping a little when she does it.  Also, get her in to a positive training class as soon as she has had her second round of shots (about age 12 weeks).  She will be lots less mouthy if she gets lots of experience playing off leash with other puppies.  If you need a referral to a positive training facility, try the "Truly Dog Friendly" site.