I am afraid that this may not be an easy fix at all. Scuffy hasn't been socialized with other dogs and his mix in my opinion is one who is a big dog in a little body. At the obed. school we have gone to there was a Cairn who decided from the initial meeting that he didn't like one of my standard poodles at all and given a chance he would make a beeline for him.
How did you try to introduce them? Doing it on neutral ground away from either one's home is the best way. What I would suggest is for the 2 of you to meet up at a park or somewhere where you two can take the dogs on a good walk. Sometimes walking together will help get them used to each other. Don't really let them interact the 1st few times - you are strictly out for a walk together.
Even if this seems to be working I wouldn't let them be together unsupervised for quite a long time just to be on the safe side. I don't know how soon your friend & you will become roommates. At home I would keep Scruffy on lead so that you can quickly react and stop him. If he gets aggressive put him in his crate to teach him that this isn't acceptable.
What obedience training has Scruffy had? Perhaps taking some classes with him will help with his response to you. I also think a great approach since it is necessary for them to be able to reside together is to consult with a qualified behaviorist who would be best qualified to observe the situation and help you find the best path to resolving the problem. They may not ever become the best of pals but hopefully Scruffy can learn to share his space. He might also be just trying to show Lily that he is alpha and he is not actually trying to hurt her but a behaviorist would be able to pick up on that better than someone who isn't able to see them together.
Best of luck! I am sure other members will give you some great suggestions.
