dog destroying house

Question
My brother-in-law had given us a dog he raised from a puppy about a month ago.  I believe she is a german shepherd/terrier mix (not positive on the terrier).  He originally either locked her in their basement or in a crate when they left the house.  I neither have room for a crate nor have a basement or other empty room to lock her in (nor do I believe in it). The behavior when we leave to run the slightest errand is getting out of hand.  I could handle when she pulled a diaper out of the garbage and tore it up...I smacked her nose near the garbage, near the debris and told her no firmly...she stopped...only to tear my drapes completely out of the wall last night when I went to the grocery store, removing a window from the frame and cracking the glass.  It took everything in me not to kick her out of the house for the night.  I love that she follows commands when we are near her, and is very protective of the kids (ages 2 and 3), however I can't never leave the house and certainly can't continue to allow this destruction.  What can I do?  She knew she was wrong and crawled on her belly all evening.  I now have to repair a wall before I can put up window covering again.  She is only about a year and a half old.  I've tried leaving a tv or radio on to keep her company...doesn't work.  I make sure she is walked just before we leave.  I ask her to "guard" the house when we are gone and I have no doubt she would, but she is doing more damage than whomever would break in would do!

Answer
Please - immediately, stop smacking the dog.  Her destructiveness is due to anxiety and you are only adding to it when you do that.  She seems to be suffering from a form of separation anxiety, which is very hard to remedy, but it can be done if you are committed to the dog.  These two resources may help you:
"I'll be Home Soon" book by Patricia McConnell, and Trish King's DVD on Anxiety.  You can get the book at amazon or dogwise.com and the tape at Tawzer Dog Videos.  If you need a behavior professional to help you, try IAABC.
Dogs don't "know they are wrong", they just know from your body language that you are irritated, so they cower to appease you.
Please read "The Culture Clash", then you'll understand.  You can get that at most libraries, or amazon.  Good luck to you.