From what I've been able to gather, this seems to have been an obsessive rumor started by Tina Barber (founder of the Shiloh Shepherds), with absolutely no factual basis whatsoever. She claims to have had an original of Von Stephanitz' book in the English, before the second editions and beyond (conveniently, what most people own) "cleaned up" the mentions of wolf blood. I have a friend who does own a first edition and no such entry exists that she is able to find, at any rate.
There have been multiple edit wars on Wikipedia regarding this supposed "fact" about wolves in GSDs. I don't pay it any legitimacy.
Von Stephanitz certainly had no love for the idea of breeding wolves with dogs and I see no reason why on earth he would have attempted to do so at all.