Hi Jull, I can't give you an anwer on this one. But I experienced a similar situation. I brought a puppy home to my not so old terrier. To me it seemed that he was going to hurt her, I was in tears.....
I talked to my dog trainer about it. My older terrier was on a leash with no handle so I could correct very quickly. And walking together helped as well. The puppy was always crated when I couldn't supervise. I was very upset, I thought two could be company.....After several weeks of constant training they became inseperable. Hang in there and get good advice from a trainer. Your dog is in hiding, definately a bit different. What about a 3rd party dog to come and play to distract? Lots of treats to the older dog.