I feel so sorry for you, Ladygrey.
Losing your wonderful Laddie, then trying to get another companion for Tully, being sensible and not getting a brand new pup, going to a registered breeder - and ending up here.
It's a horrid situation you are in, and because of the very recent trauma of losing Laddie, it's quite understandable that you are overwhelmed.
So first of all, don't blame yourself. In hindsight, it hasn't been your best decision, but you did what you did for good reasons, and went about it in what seemed at the time to be a responsible manner. It could have turned out really well.
I am sure you would be able to get this dog to settle and adjust with the time and effort he seems to need. And I agree, there is a strong likelihood he's been homed and returned at least once before, perhaps more. So hardly surprising the poor fella is confused and 'acting up'. And he may well be picking up on your own grief and stress too, yes, similarly from Tully.
If you aren't able to devote that time and energy to him - and feel confident of achieving a good outcome, because if you are not confident, it's unlikely to work out, sadly - then I do agree it's probably best to either return or rehome him.
Of course you can't just sell him on, none of us would do that in these circumstances.
If he goes back to the breeder, you may or may not get some of the money back. If she's got a Facebook page, presumeably she can't risk screwing you completely...
But the poor dog is unlikely to find the right home while the breeder is misrepresenting him so.
So I would, if you can do it, take him to the breed rescue or the Dogs' Trust. Either will work with him and make sure he goes to suitable forever home, with support to ensure it all works out for him and the new owner. And it's just possible, especially if you have a Dogs' Trust or a breed rescue person nearby to you, they may be able to work with you to get him settled with you - certainly worth discussing, I'd have thought.