I had a similar issue with one of my dogs. With him it was environmental. I had started taking him to the doggy daycare I was working at and between the concrete floors and outdoor rocks his paw pads got quite torn up and blistered. He had licked them so much that it was hard to tell what the cause was, they were quite swollen. He was forced to wear an e-collar and I put him on antibiotics just to cover all the bases. He was allowed out of the house to go to the bathroom and that was it. We didn't want to risk any more damage being done. It took him about a week to heal to the point that we took the e-collar off and started to coat his pads with a pad protector. Since you mentioned that your dog LOVES walks perhaps he took a stroll through an area with some broken glass bits, or an especially hot stretch of pavement.
The most important thing is to keep them from licking, don't give in to the incredibly sad eyes that your dog will give you... keep that e-collar on
We tried boots with our dog too but they were too unreliable. I ended up spending the extra money and bought a soft e-collar.
Another thing I thought of was perhaps it is fungal. Your vet said definitely not bacterial but did they check for fungal causes?
"He is your friend, your partner, your defender, your dog. You are his life, his love, his leader. He will be yours, faithful and true, to the last beat of his heart. You owe it to him to be worthy of such devotion."