It is important to understand why the dog is barking and growling. When you say hackles up, that is classic fear related response. This is important in that it may help you to respond differently to the puppy, knowing the puppy is aggressing out of fear. If it were not the case, giving him a correction and then giving him a command at what you want him to do, and beefing up your leadership would work fine.
But with a fearful puppy hitting him on the nose is likely to make him more fearful. You do not want him to bark and growl and hackle at the other dog. And you do not want to coddle him when he is fearful. The best thing to do is to get him out, but keep your distance. Before he considers barking or growling, get his attention on you and have him do something, SIT! When he does that, you praise him. Gradually start working him closer to other dogs. At the same time, work in class on basic commands, lots of praise and treats. A fearful dog likes good leadership that will protect him. Through training he will gain confidence in you and in himself, and you will gain confidence/trust in him. As this builds, usually the reactive fearful behavior should lesson.
The goal may be different than your other dogs. He may not be a dog that will enjoy a play date with your buddies dog. He may be a dog that would prefer to stay home than romp with another dog. For starters, getting him to be able to be under control near other dogs, to ignore other dogs might be where you end up.
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