When a dog is nervous of noises or sudden movements too close to them it is a good idea to put the dog on a leash for control and to prevent the habit of running away. Then slowly and rhythmically make a tapping noise near the dog - just loud enough to get a small reaction from the dog but not freak him out. Rhythm creates a predictable action and the brain can retrain itself not to react but to remain calm when noises happen. Right now her response is a rapid right brain, adrenaline rush of fear. But the more she can experience the noise without a strong reaction in her brain and realize that it is not a life threatening situation, then she can learn to relax and her mind with think instead of react. Now we have a flow of seritonin in the brain which helps her to relax naturally. While you are creating the rhythmic noise you hold the leash (loosely) so she cannot flee. As she begins to relax and settle down then stop the noise and give her a break. Let the experience sink in. Then do it again but make the noise slightly louder and still rhythmic. Soon you will be able to make very loud noises and she should be able to remain relaxed. Then you need to make the noise less predictable - always returning to a softer rhythm if she gets too upset. You are retraining the brain.
Another way is to play music that has loud startles in it like the William Tell Overture. Play it softly during meals and increase the volume as she shows she can eat and not react to the startles.
Taking her to the market or park could be too much intensity all at once. It can be okay if you start at a comfortable distance away from the crowd. If she can handle it at 30 feet away, then move 5 feet closer and stay there until you see her relax. Then keep getting closer in baby steps until you can get right up to the crowd and she doesn't care. Then you can walk 5 steps in one direction and 5 in the other, then 10 steps in each direction, and then 20 steps in each direction. Retracing your steps in familiar territory while people go by helps her to not be frightened by both the new territory, new smells in addition to new people.
It is also vital that you do not allow people to approach her without your permission and direction. When a person comes straight at her that is maximum pressure to her and it can push her over the edge. Ask the person to walk past her a few times without looking at her or talking to her. Then the person can walk to her side (still not looking at her) and squat down next to her (still not acknowledging her existence) and wait for her to relax and shift her focus from escape to calmness. She will probably look unsettled at first but then when she sees the person is not interested in her then she might lean over to sniff the person. Relax into this. When it seems right then have the person walk away and come back and do it again. When you see she is more relaxed the person can calmly stroke the SIDE of her face for 2 seconds and take their hand away. Repeat this a few times and be done. You need to try to set this up with lots of people throughout the day so that each time she has a positive experience she will remember that and it will start to erase her innate fears. She does not have to like any of these people but she does have to have good manners.
The other key to this is that through her trust in you she can learn to trust others. When she sees you are comfortable with people and shake their hands then she believes that she is safer. She needs to know you have her back and will not let harm come to her - a good leader protects the pack.
Hope this helps.
Love Them & Lead Them,
~Elizabeth & Doug
Dog Training the Way Nature Intended