Nipping & timid

I would start by not allowing anyone to try to pick her up.  Allow her to come to them of her own accord - for example, do not allow the other person to try to call her over, etc.

 I adopted my two dogs and they were 6 months old and 1 year old.  They had not been socialized, did not have a good life and were near starving.  It has taken a lot of time and patience on my part and some mistakes but I finally realized that my dogs felt a lot of pressure when people wanted to pet them or pick them up.  Only by not allowing it have they become friendly.  And even still, if I allow too many stranger to approach or try to pet, they will sometimes get fearful again.

 My boy dog would do the pants nipping thing when I first got him.  Not when people came in, but when people got up to leave for some reason. I worked on this first by getting him to come to me for a game, etc. when people came in.  Then he had to do some "sit", "down" stuff.  Then he seemed to think the people had been there a while and was good.  When people got up to leave, I'd again do some "sit" "down" stuff to distract him.  Now he doesn't do it anymore.  He can still get nervous if someone jumps up and starts running though (like a kid would do).  So it is still a work in progress.  But he is friendlier now, doesn't bark, has never bitten and will even sit in the laps of visitors now.  But he still won't let them pick him up and as long as he is otherwise well behaved I am OK with that.

Thank you for your response.  Macie will take her toys to "strangers" (anyone who doesn't like in our house) and wants them to play but she's not going to dare let them touch her.  Even people she plays with all the time.  It gets to be embarrassing.

 Read "The Cautious Canine" and "Help for Your Shy Dog".  You'll get lots of help on how to make this a bit better.  It sounds like she missed being socialized (between 8-12 weeks of age).  So, while you can make things better, she may always be somewhat shy.  Don't be embarrassed, just protect her from people reaching over her, and let her go to them (if she doesn't, don't force it - just have the person toss a small treat over to her).

Good book recs. from Spiritdogs.  I have both those books and they are very good.

If she takes her toys and want people to play with her, that is very good!  Let them play gently with her without making any attempt to touch her.  I bet she comes around in no time.  Her not wanting people to touch her really has a lot to do with the pressure she feels when they keep trying and she doesn't want it.  It forces her to back away instead of approaching.  Think of it this way, if you were just getting to know someone and they kept putting their arm around you or hugging you inappropriately, you'd soon be backing away at the mere sight of the person.  If they let you warm up to them in your own time, you might then soon welcome their hugs!