How do I make my scaredy-dog grow a pair?

We've had our 3 month old female mastiff/border collie mix for about a month. Two weeks in we had her potty trained. Things were going great: she would stay at our pace on the leash, do her business (admist enthusiastic praise), and was perfectly fine with a short or long walk. Then for no apparant reason she has decided that every dog bark, every door slam, every breeze scares the crap out of her. We live in an apartment complex so you can imagine how frustrating it is that no matter when we go outside for her walks, there will always be someone or something to scare the crap out of her. She will refuse to do anything but run to the door when these "distractions" happen, which has resulted in her no longer going to the bathroom outside. I'm getting increasingly frustrated at the damage she is doing to my carpets, and the smell of the house, as well as the fact that this is causing our other dog to mark in the house now (he doesn't like competition). We clean up after her every time and we've shampooed the carpets and when we catch her in the act we take her outside (where she gets scared and won't finish up). Does anyone have any advice? I want to find a link or something to help us with this problem but all the links on potty training just say to walk them frequently and praise them (which we still do). MY CARPETS NEED YOUR HELP! thanks.