Hi, I have just rehomed a year old terrier cross that was kept shut in a shed for her first 7 months so is therefore very nervous of people. She has been in a foster home and apparantly been fine and only spook barked at people coming in the front door. I have had her 10 days and on 3 occasions when men have come over to her when out (on lead) she has barked and looked like she tried to nip (it happens to fast to be ceratin). Today we had a male visitor to the house so I kept her shut away until he was sitting down and then let her out and told him to ignore her completely.She was fine with this but later on he stood up she followed him out of the room but as he bent down to pick something up she nipped and caught his hand,she didnt break the skin but as he is not at all a dog person he was not very happy which made me feel awful. I couldnt ask him to feed her treats as he was then annoyed by her actions. I can understand why she nips if on the lead and is unable to get away but was shocked she came forward and nipped when she had the option to run away. I have her on a herbal calming mix,Zylene and a Dap collar to help her stress and generally she seems fine and happy with everyday life. I will obvoiusly do all the basic obedience and counter conditioning with her but can anyone with experience of a fear biter reassure me I will be able to help her overcome this ( I know she will never be bombproof ) Is clicker training best and do I verbally correct her if she does bark or just try to remove her ASAP. I really want to work on this problem before it escalates anymore, so any advice would be welcome.

Sounds very much like my rescue JRT bitch.
I've had mine for nearly four years and when she first came here i couldn't even stroke her for about a fortnight. She was a bag of nerves with absolutely no social skills. It has taken me a long time and a lot of patience with her but it has been worth it.
It will take a while for your bitch to build up trust with dog friendly people she knows she can trust.
Do you know anything about her past at all? Was it a man who kept her shut in a shed? I guess she nipped your friend because she felt threatened by him entering her space and at her level.
A big yes to puppy classes and clicker training. Terriers in general are easy to train and keen to please. From my experience the nipping and fear biting will improve with time but you need patience, and plenty of it and don't expect results overnight.
Even after four years my JRT still flinches and jumps if i raise my hand to reach for something, if she sees the mop or hears any kind of loud banging noises.
If there is a knock at my front door, initially i have five dogs barking letting me know. (The JRT being the yappiest of them all) I ask them all to go and lay down in their baskets. The guest is welcomed in to the house and only when i say so are they allowed to do the meet & greet thing! 
I guess your new terrier is still finding her feet with her new surroundings, you and other people. Who knows what survival tactics she may have had to resort to while living in the shed.

When dogs feel threatened they have three options, 'flight', 'fight' or 'freeze'. 

I would always expect a typical terrier to go for option two, I have found with similar scenario of fostering unsocialised members of my breed and their coping strategy is the third option, with other breeds/dogs it may well be the first option.

You can overcome this problem!

But - do not succumb to the temptation to rush things. To start with, keep her away from people, really, long long way away. Turn and go the other way rather than pass someone on the pavement, cross the road, hide if you have to and distract and reward her with VERY high value treats.

If you have to have people to the house, put her in another room with something really good to do - if they are going to be there long enough that she will become upset by this, bring her into the room on a lead (have them sit where you won't pass them closely) and then sit as far away as possible and again distract her with rewards.

Ask the visitor to stay seated until you remove her from the room as someone suddenly moving can trigger a fearful reaction, as you have found out!

Do NOT have guests or strangers at this point, feed her. Instead YOU reward her, the next stage will be to have a few trusted people (trusted to do exactly as you say, to the letter, and not get clever and think for themselves), one per visit, toss high value rewards too her (and in fact, past her, not in any way luring her to move forwards towards them, sideways and back away from them is much better).

That does two things - she starts to associate people directly with good things and throwing food to the side and behind her so she must move reminds her she has other options than approaching them. Fearful dogs forget this and tend to focus only on the source of their fear!

Its also really important to remember that stress levels go up fast and come down slowly, imagine her as a dog shaped water glass - fills up quickly from the tap, takes a loooooooong time for the contents to evaporate though. So each incident, good OR bad, creates stress which takes days to dissipate. Therefore, do not think you can build on success progressively, ie, one person today, two persons tomorrow, or that you can replace a bad experience one day with setting up a good one of equal difficulty the next; ie, if she freaks out at someone on Monday, forget Tuesday.. do something simple on Wednesday and maybe think about setting up a good experience on Thursday.

This latter thing is why people think what they are doing is not working, they think 'well Fido coped with seeing one person yesterday, and one person the day before, why has he freaked out at one person today..' the answer is that seeing one person two days in a row was just about tolerable, but the third time, the 'water glass' of stress overflowed, it hadn't had time to evaporate!

Also harden your heart to what people think and expect - IF you mess up, do NOT tell her off. People will expect you to do so, but don't, as you will only be adding to her stress and not helping.

We have 2 terriers within the household, a male and a female from the same litter. We have had them from pups, they have been socialised, been to puppy classes and attended training etc and yet the little male objects strongly to any strange man that enters the house. Ladies and kids, even strange dogs are all welcome, but woe betide any man.
He has nipped hands and on a couple of times even nipped backsides of men that have just walked in ( tv repair man, plumber etc )We now make sure that he is out of the way until the man has gone, or in the case of a visitor that may stay longer than a fleeting visit, we get them seated with a cuppa first and then let the little terrier in to meet them and this is fine. It is just the initial entering that he objects to, but once the guest is seated and the atmosphere is quieter then he is ok about it all. However if the guest goes out to the car and comes back in again, then we have the same problem as when he originally arrived.

We just need to be aware of the problem and keep the visitor separate until the excitement of the other dogs has died down as our little boy over reacts to the excitement and feels he needs to protect us all, but once he sees that the visitor has been accepted by us all, then he quietens down himself. It's just a matter of handling the situation, and trying to avoid any sudden movements that could set him off again.

BTW He is now 2 and nowhere near as bad as he used to be, so he is improving, and by the time he reaches 15 he will probably be the sweetest boy to male guests LOL  !!!!

theemx,
Excellent advice!

Thank you all for your advice, after sleeping on it and reading 'theemx' reply I realised I was expecting too much too soon. I had set unrealistic targets of getting her to meet as many new people as possible so thank you for reminding me she is a very scared young dog and needs me to take it much slower. I feel guilty I put her in these positions where she cannot cope and will just focus on her basic obedience (which she adores) and letting her settle in. I have noticed her legs shaking and didnt realise how long it takes for her stress levels to return to normal.
I also love the idea of people tossing treats behind her, again I was trying to get people to lure her over for treats and they always pushed it too far by trying to touch her. I must look at all the positives she has achieved in 10 days and just enjoy the love she is giving me.
Thank you for helping me to see it so much clearer, I will now treat today as our first step forward in our journey together.

Don't feel bad - some of your instincts, such as having people sit down before she met them, were spot on. Its just we humans do forget that no matter what our intentions, a dog can perceive totally innocent and well meant actions as scary. We also tend to want to pro-actively DO stuff.. when often doing as little as possible can be much the better answer.

She's a lucky dog to have found you and dogs forgive so much of our well meant errors! You'll be fine!

sounds very familiar to me - see my thread about 'vets tonight' - mine has been going on a long time though.
I wish you all the best with sorting her out as its no fun otherwise. Keep going with DAP & zykleen sadly this didnt work for me but its worth trying everything.