Long term crating damage...need help.

Will take a long time to undo the damage, and he may see his crate as 'the only safe place'. 

You may need to use a calmative -- at the least something like Hylands "Calms" (or Calms Forte) which is a homeopathic and not at all addictive -- but this almost sounds like an obsessive behavior and he may need some more serious help breaking that behavior.  I've had SUPERB luck using TCVM (traditional Chinese veterinary medicine) herbals with my little peke who is similar.  She was extremely obsessive when we rescued her with some really severe repetitive behaviors that bordered on seizure activity.  It's taken a couple of years to unravel her but she does incredibly well now with none of the obsessive stuff at all. 

http://www.tcvm.com -- that's the Chi Institute website and they have a good locator on the left side of their home page.  I've used them to refer people for many years. 

Mdog59

I would like to seriously apply some behavior mod before thinking about meds.  Any thoughts?

When a new dog comes into my home I give the dog plenty of time, as much as a month to get acclimated to its new environment.  The dog you see today may be quite different from the dog a month from now.  During this acclimation period, I place very little demands and expectations on the dog, just working on potty training and the Come command.  I stay aloof from the dog and tend to its needs of food, water, snacks, security, affections (if requested), exercise, play, order, structure, and routine.  I try and limit as much external stimulus as possible, gradually introducing new situation and observing how the dog reacts.  During this time, I also read up on the breed and talk to breed specific rescue groups to learn as much as I can.  I observe the dog very closely for any behavior issues.  In your case you have already observed general anxiety and odd nervous behavior where there should be none.  Tending to the dog's needs, especially satisfying the security need may help the dog overcome.  Whenever a behavior is fear based, the dog has to work it out for himself and you can only provide the environment for the dog to do so. 

The circling behavior bothers me because that is a sign of compulsive behavior to cope with unfounded anxiety.  I would wait and observe if there is any change in this behavior as the dog gains confidence and feels secure in your home.  If it remains unchanged, I would get in touch with a qualified behaviorist who can prove to you they have experience in this area.

Do try and create a stress-free environment for the dog and please don't consider obedience training right away.  A dog stressed like this has an overabundance of stress hormones released in its body.  These stress hormones are suppose to work to make a dog cautious in a new situation and these hormones stay in the dog's body for days.  With every new situation that causes stress, the dog's body releases more of these hormones and an overabundance with put the dog on edge practically all the time.  That may be what you are seeing.