I agree with Sophie... as always. You are the bomb, girl.

EVERY fearful dog has a theshold. While Skya might not be uncomfortable taking treats from a person's hand who is 2 feet away, she might be perfectly fine if that person is tossing them from 10 feet away. Find a point where she isn't acting nervous or fearful, give her tons of praise and treats for it, and progress slowly until she can take treats from the strangers hand. You might also start clicker training and incorperating that... it helped me A LOT with desensitizing/conditioning Gonzo. It's important that you allow her to approach people at her own pace, rather than forcing her on them, as frustrating as it is to make people wait. I know it's hard, and you feel bad, but it is much better to have a dog that is confident and happy to greet people, rather than one that must be forced to greet people.

I'm sure Skya will overcome her fears. She's lucky she has such a dedicated Mommy. Here are a few good links you might want to browse:

http://www.fearfuldogs.com/index.html

http://www.animalfarmfoundation.org/...26&item=192%20
(this is good for both aroused and fearful dogs)

http://www.responsibledog.net/helplessness.html
(a fantastic article regarding restraining/forcing something unpleasant on a fearful dog... of course, it's to the extreme, but it's interesting)