Dog owners, wtf am I doing wrong
It sounds totally corny, but take the dog outside and just stay out there with him until he eventually pees, and then make a BIG deal over how good he is, and act all excited and happy and pet him and stuff (haha, might want to wait till hes done, but as soon as he starts, tell him he's good, etc, etc so he knows thats what you want). You can also train them to know a command to go pee, like my dog, when I'd take him out, and he'd eventually pee, I'd tell him "good boy... go out" and eventually he sort of learned that "go out" meant to go pee. you dont want to say it until he's actually doing it though, because you want him to associate the action with the word.
Same thing goes for teaching them to sit/lay down/whatever. don't keep repeating "sit down" while you're trying to push him down, or however you get him to do it, because then they associate the commant with all this pushing. Once they do what you want, say the command and that the're good, and htey will start to associate the command with the end result, which is what you want.
I've never worked with little dogs, but this type of training worked with my lab mix who I brought home after finding him as an abused stray, and it also worked with my sister's mastiff, who is 185 lbs of stupid
Kinda feel bad for giving them a dog that pisses everywhere. They talked to the vet and he said that it is very hard if not impossible to house train the toy breed of dogs. My advice is to ditch the puppy pads and wipe the dogs nose in its mess and then put it outside, worked for me with a few dogs. 
