Seamusk,

First thing I'd do is make sure I'm not reinforcing his fear.
Make sure your body language and voice convey that you're
totally unconcerned. I'd probably tell him what a "silly boy"
he was being and then just ignore the fear.

Next I'd make the backyard just the most absolute best place
to be. Get a really awesome treat that you only use for
outside... Hamburger or Potato chip, whatever, just anything
he'd die to have... Not some dried up ole dog biscuit that he'd
normally get. I'd also get a really fun toy too.

Get him really interested in the treat and only give it to him
while he's outside. Then try to get him excited about playing
with the toy. The goal is to make the backyard a really fun
place to be. So that's where he gets the best treat in the
world and gets to play fun games.

IMO, the key to potty training is praise, not scolding. You have to
make pottying outside the greatest thing in the world too.
Since he's having issues, I'd probably give him the really good
outside treat, everytime he pottied outside. If I caught him in
the act inside, I'd make a noise to startle him, like "Unt!", then
take him right outside. If he then finished up pottying outside,
I'd praise him to the hilt and give him the treat. Also, I wouldn't
tie him up outside while I cleaned up. Being tied up outside,
to me, would make outside a dreaded place to be.

Par...