It is not normal and most dogs have adapted by age 11 months. This is very common in dogs separated from mom dog and litter mates prior to age 12 weeks of age.

You need to work with her on socializing. As Karen suggested, arrange play dates with someone so she sees one dog on a regular basis. A pup about her age will be best as they will eventually play together.

Also, do you walk her? She needs to go on regular walks -- at parks, on bike paths, around the neighborhood. Keep a baggie of treats in your pocket. When no one is near and she is relaxed and happy: TREAT! Give her a treat, praise and petting. Let her know she is doing proper behavior. Reinforce that behavior. When someone approaches, start by crossing the street away from them. She can look from a distance and be fine and you TREAT! Again give her treats, praise and petting so she knows that is fine.

When she shows signs of being scared, assess the situation. As long as she is safe, don't give in to her. Don't pick her up, or start talking to her. Just act as you would if she were NOT acting that way - keep walking, looking around, if you talk to her in a normal voice when walking keep that up (I get to be a regular chatter box on walks!)

Did you complete the entire preschool course? Most are 6 or 7 weeks. She should have been getting used to the routine by that point. Did the instructor give any pointers to you?

Take her to more classes. Go someplace that uses positive reinforcement training methods. You may find someplace near you using this search:
http://www.apdt.com/petowners/ts/default.aspx

APDT - American Pet Dog Trainers - I've been very pleased with instructors trained and certified by this organization.

It's not going to happen if both of you stay home and snuggle, she needs time out with others - both dogs and people - to learn she is safe.