I need help, not sure what's wrong!

certain physical corrections DO NOT induce fear. obviously smacking and punching and kicking are not a solution but if you have a dog then you probably know what i mean when i say "physical correction"

 
A physical correction can be as hard as a smack and as light as a leash pop, but when they are applied at a moment when the dog is already afraid, they can exacerbate fear.  The fearful dog needs to be ignored for fearful behavior, and rewarded for being brave.  No punishment needed - it makes matters worse.  There is nothing worse you can do than make a fear biter more fearful - that will get you in serious trouble.  Confidence building is what you want to do, together with a program of consistent training.  Read "The Cautious Canine" for some tips on having a more confident dog.  Another good one is Suzanne Clothier's booklet "Teaching Self Control".  Often, dogs that are fearful think with the primitive parts of their brains LOL and need some help to learn to stay in control of themselves.

certain physical corrections DO NOT induce fear. obviously smacking and punching and kicking are not a solution but if you have a dog then you probably know what i mean when i say "physical correction"

 
That is just double talk.  Corrections are corrections whether they are with your hand or leash.  As Anne said, correcting a fearful dog with make your problem worse.

Perhaps we should ask just what sort of physical corrections are being advocated?  Not that I'd use any, particularly in this case, but what physical corrections are not fear inducing??

Sorry I just now got back to this.
Thank you SOOO much everybody for getting back to me, you're such a HUGE help!
To answer your questions Mic:
What kind of exercise does Joey get?
A 30 minute walk in the morning before I leave for work (I walk fast but I don't run), usually a 20 minute run with DH mid-morning, a 20 to 30 minute walk over my lunch break (again fast walking but not running), and either a 30 to 45 minute walk in the afternoon or a visit to the dog park sometimes both that depends on what's going on!
Honestly, do you think that's enough? He's not hyper in the house, plays nicely with his toys but sleeps a lot during the day. He's not destructive at ALL, goes into his crate while we're gone, usually by 7pm he's passed out. I thought I give him enough exercise but please let me know if you don't think so!!!
 
What kind of obedience work has been done?
we did a puppy kindergarten class, he graduated and did VERY well, at the end we took his Canine Good Citizentest which he passed too! (this was about 3 months ago and we train on a regular basis but not as much as we should [&o])
 
What do you do when Joey gets fired up?
I don't console him, it's usually over within a couple seconds. When he growled at that woman last week I just kept walking (didn't talk to him or anything), I was too shocked to do anything).
 
What kind of food is Joey eating?
Joey is still on Innova Puppy. He gets cottage cheese, yogurt and vegetables every day as well. He weighs about 25 pounds and is in great shape (lean)
 
Where is Joey sleeping?
Joey sleeps in his crate at night. Sometimes on the weekends he gets to sleep with us but that's rare (maybe once or twice a month). He is NOT protective of the bed, we can move him at any time if we need to and he never fusses if he has to sleep in his crate the next day.
 
What is his schedule like?
6 am - wake up - potty break
6:15 am - eats breakfast
7 am - 30 minute walk
8 am - I leave for work, DH is a student so off for the summer, usually if we're both gone he goes to his crate, right now he goes and takes a nap (usually until I come home for lunch)
10 am - DH may take him for a run (depending on how lazy DH is, don't get me started on that one [>:]!)
12 pm - I come home for lunch, 25 minute walk
4:30 pm - either another walk or dog park, sometimes both
6 pm - eats dinner (this can be anywhere between 6 pm and 7 pm)
7:30 pm - he usually passes out
There's lots of play time in between but he sleeps a LOT during the day! He stays in the crate when we're not home and that's probably an average of 4 to 5 hours a day.
 
I don't think (but then again I'm not a trainer) that he's being protective of me, he seems to be scared (and he fits right in that fear-period with his age). I do NOT console him at all when he acts like this. And the thing is that we go on 3 walks day, we see tons of people every time and this happens maybe once every other week (usually when some body approaches us). Wouldn't this happen a lot more if he was being protective of me?

I kind of hate to give this advice without seeing the situation, but reading your response I think you are doing a GREAT job. 
 
Only changes I would make:
 
Make sure he gets at least 1.5 hours of exercise everyday...seven days a week...rain or shine...sleet or snow...you get the idea.
 
Increase the complexity on quantity of obedience you are doing.  Move on to more difficult commands, and make sure you do a little everyday.  This will help build up Joey's confidence during a complicated time. 
 
I would start a very regimented NILIF program.  NILIF is also referred to as deference protocol.  This means that before you do anything for your dog he must defer to you first.  If he wants our...he must sit.  If he wants in...he must sit.  If he wants to be petted...he must sit....fed...walked...leashed...brushed...washed...out of crate....in crate...ect.  I ask the dog to sit for at least 3 secs (they must be calm, sitting still, and facing you) then he can have what he wants.
 
Otherwise, just be patient.  You are doing well!

as far as physical corrections touching the dog to pull the dogs attention from them to you and asking him to sit and be calm, but it also depends on how fixated you allow him to be on other things than YOU during your walk. you want to know hes listening and paying attention to you even when he is not looking directly at you without him being fearful

Which is why I maintain that YOU need to be the most fascinating thing on the face of the earth when training your dogs.  My crew, even off lead don't get too danged far from me and even when they DO run on ahead, I don't have to call them back...they come back in short order on their own, because they NEVER know what I'm going to do....I might do an about face (I might see a snake and take off at warp speed all the while emitting an ear shattering scream), I might randomly scatter homemade liver treats, I might take a ball out of my pocket and start tossing it around, or a frisbee....they just never know, so they ALWAYS pay close attention to me, even if they are a bit ahead, and even if they are off lead.
 
But I sure wouldn't consider touching my dog a physical correction.  I often lay a calming hand on someone, or drop a pat on the head, or scritch on the butt......so apparently we have a way different defination of physical corrections.

I would second what Mic suggests, plus I might add a bit of "greeting a friendly stranger" training.   I usually ask a dog savvy person to volunteer as the stranger, and let the dog go to them at first, while they remain stationary and don't make eye contact.  Then, I work up from there.  The "stranger" gets progressively more weird (wearing ball caps, sunglasses, etc.)

physical correction certainly doesnt mean u have to hurt or startle the dog but simply use touch to get their attention, on their own dogs use touch and body language not sound, my dog uses the same method on me when he wants a treat he walks up to me and pokes my leg with his nose instead of barking his head off like i've seen other dogs do to their owners  lol

my dog uses the same method on me when he wants a treat he walks up to me and pokes my leg with his nose instead of barking his head off like i've seen other dogs do to their owners lol

As dominance focused as you are, you let your dog tell you when he wants a treat?

friendship and favors go both ways, just because my dogs respect me and see me as the dominant one doesnt meani dont spoil them a bit and my oldest doesnt get to poke at me after years of friendship. hes like an old man  lol kizzie has had years of training and learning and after he stopped doing ANYTHING wrong he earned the right to boss me around a bit, but hes old enough and knows better, and understands when im serious. he knows the boundaries

my dog uses the same method on me when he wants a treat he walks up to me and pokes my leg with his nose instead of barking his head off like i've seen other dogs do to their owners

 
Actually, there is absolutely no difference between demand barking and demand poking.  It is behavior designed to get the dog what it wants, and when you give in to it, you are reinforcing the behavior.  So, all this means is that the owners whose dogs bark are reinforcing that, and the owners whose dogs poke are doing the same.  Personally, I would rather my dogs not be obnoxious in any way, so I do not reinforce behaviors I haven't asked for, and if they are poking or barking to get their way, they get zip.

Treats are pretty rare in my house, other than training treats or bones.  And no one would get a treat for either barking or poking me.  I find it incredibly rude when Thor walks up and jabs me with his nose so what he gets for that is IGNORED.

but you see kizzie has very much earned his right to let me know when he wants something considering he has always done everything i have asked of him, granted it may seem odd that i let him get away with it, but if i ignore him the first time he just goes away so it's not like im giving in if i dont want to, and he seems to understand that just fine