I was going to share my story about a similar situation we had with a hoarder cat rescue, but I see that you have since found a new, loving animal for your life! c':
Best of luck with your new puppy and I'll keep the other dog in my thoughts! I'm sure someone will take him in who can handle him.
It took us almost 6 months before our hoarder rescue cat could trust us, so it IS a very big commitment and I dont think you did the wrong thing at all!
GSD: Gaia, White Shep of unknown lineage
Location: Alabama, USA
I'm always looking for new training advice and sturdier toys! ^^