I have a 2 year old schnauzer, we bought him a few months after he was born… and he is the EXACT same way. He is a fearful dog, and we kind of just accepted that, so long as he seems happy to us. He loves his family, he loves to play, when strangers come around, he sniffs and growls lowly, but never lets them get near. He has been this way since we got him, so we figured that this is just his personality trait, as I strongly believe dogs have personalities as human beings do. Based on my experience with him in the last 2 and a half years, there is little we can do to change this about him. Sometimes, when strangers give treats, it can really work. Also, another thing that works is that I telll strangers to kneel on the ground when they want to pet him, instead of tower over. Kneel on the ground, or even better, sit indian style, with a treat, and slap your lap gently. It is pretty much a slow process there. Most strangers don’t give up, but I do. :P Haha. One thing I hate is the fact that neighborhood dogs will get very aggresive with him, and he has been bit more than once! He never reacts aggresively, he only sits there and takes it, which saddens me. So I say, be careful around her and other dogs, make sure they don’t sense her fear and try to attack. Just be cautious. Just be there for her. If you are gentle, you can really help her improve. Here is a website that might help!—->
http://www.fearfuldogs.com/index.html