oh no, sorry to hear about that. I really don't kow what you could do, I've never had a dog and a cat at the same time... Sounds really gross though when Tess picks the cat poop... Have you tried to say no immediately when Tess goes near the litterbox and is planning to go inside?

I'm sure other dog people can help you out more. Good luck with Tess, and don't lose your patience! Easier said than done I know, but things have funny way of turning right always.