dog afraid of affection

Question
I have an older male miniature poodle that I took in about 4 months ago.  Teddy had been attacked by 2 other dogs and was about to be put down by my father-in-law.  We were unable to locate an owner, but by his appearance I would say he had been homeless for awhile.  His fur was matted and nails overgrown.  He was a mess!! I took him home, got him to a vet, took time off from work and spoon fed him until he was strong enough to move around.  Physically, he made an amazing recovery. He was warming up to me and allowing me to pet him at times.  When his wounds healed, I took  him to a groomer.  When I picked him up, the groomer informed me that my dog was a drama queen and needed obediance training.  He has not been the same since.  He will not let me pet him.   He is not aggressive, enjoys being around all people but does not want you to pet him or  hold him.  He will sit on my lap for hours, but if I try to touch him, he moves away.  If you lay down in the floor and ask for kisses, he will run up and lick your nose.  When I pick him up to take him outside/inside, he cries like he is in pain.  As soon as you put him down, he is fine and running in circles.  I don't think it is residual pain from the attack, because he can jump off the recliner without a whimper.  He acts like affection hurts. I spend a lot of time with him.  He tolerates my other little dog.  Just can't figure out what I can do differently.

Answer
Honestly, it sounds like he had a horrifying experience at the groomer.  He was fine until you took him there, he gave the groomer a hard time, who knows what happened, and then he is like this.  It is the most logical conclusion.

Using treats reward him for allowing you to touch him.  Let him chew on a piece of jerky or meat while you place you hand on him.  Do not even move your hand at this time-wait until he is more comfortable with your touch then try gently petting.  

You may also want to take him in for a checkup to make sure he does not have a skin or other issue that is causing him pain.