Have you considered medication to help alleviate his anxiety? Medication can help take the edge off and bring his brain to a place that he can learn. Dogs can't learn when they are constantly over threshold (meaning it's just entirely too overwhelming), and based on his behavior it sounds like he's pretty overwhelmed with just being alive. It's something to talk with your vet about. It may never make him normal, but it will at least help him enjoy life a little more and be less concerned with normal, everyday things.
My guess would be that something occurred that caused the backslide in his progress. It may have been inconsequential to you but devastating to him. It happens sometimes. Continue to be patient and gentle with him. Reward him greatly with treats for doing simple things like making eye contact with you, not running away at a "scary" noise, standing outside and observing happenings, making it just a few feet from home, or maybe just looking at strangers. Try not to drag him out from underneath the bed. I know sometimes you probably have to, but avoid it if at all possible. Try to lure him out with yummy treats instead. Forcing him to do much of anything likely isn't helping and could possibly make it worse.
Have your tried giving him a special place of his own, like a crate? Place a cover over the crate and make it dark and comfy inside so he has a place to go to feel secure when he is scared. Might be more appropriate than under the bed.
My guess would be that something occurred that caused the backslide in his progress. It may have been inconsequential to you but devastating to him. It happens sometimes. Continue to be patient and gentle with him. Reward him greatly with treats for doing simple things like making eye contact with you, not running away at a "scary" noise, standing outside and observing happenings, making it just a few feet from home, or maybe just looking at strangers. Try not to drag him out from underneath the bed. I know sometimes you probably have to, but avoid it if at all possible. Try to lure him out with yummy treats instead. Forcing him to do much of anything likely isn't helping and could possibly make it worse.
Have your tried giving him a special place of his own, like a crate? Place a cover over the crate and make it dark and comfy inside so he has a place to go to feel secure when he is scared. Might be more appropriate than under the bed.