Just a couple of thoughts for you-- my own shy dog taught me much about nervousness, but of course he was him and Neo is Neo. All the same I may have some tips you could try.
First off, don't beat yourself up. It is possible that this is a natural condition. It does pop up, and it's probably more common than people think. You see it most often in herding and guarding breeds, which makes sense if you think about it: we've selected for a temperament that is loving and protecting towards family and flock, and distrustful of strangers and potential danger. In a well-balanced dog, you get a loyal guardian. In some, however, the distrustful trait is yanked up to 11 and manifests as fear. It can pop up in retrievers and gun dogs too-- it's just a thing. The thing to do with it is to acknowledge it and move on.
Here's something important: whatever sends Neo into a panic, whatever it is, he cannot learn anything when he is in that mental zone. It's physically impossible. His brain is in shutdown. It is absolutely fine for you to protect him from that state. People may tell you 'Oh, he'll get over it'-- he won't. If he does get into that state of mortal terror, even if it's just because a little girl in a taffeta princess costume is blowing bubbles, best thing to do is to take him away to a safe spot.
You can gently introduce him to things that are triggering, from a safe distance. He might be nervous, but basically okay watching a little girl in a taffeta princess costume blowing bubbles from up on a hill. You might gradually bring him closer. You might invite a quiet, well-behaved little girl in a taffeta princess costume with no bubbles to accompany you on a quiet walk, eventually, but don't be surprised if it takes a long time to work up to this (she is, of course, a stand-in for all things mortally terrifying).
You can ease situations by working up to them. Things like vacuum cleaners are notorious triggers for shy dogs. Leave it out, turned off, for a while, so he gets used to the presence, smell and look of it. Encourage him to come near it. Play 'Check it out!'-- thwap it playfully and invite him to come see it, nose it all over, see that it isn't harmful. Pick it up, show him its underside. Treats are essential. Now, you're going to have to turn it on. Start by going over to it, thwap it, show it's the same old thing, and announce that you are going to make a very loud noise now. A VERY LOUD NOISE NOW.
A VERY, VERY LOUD NOISE!!!!! Gradually escalate the volume of your own voice so that the fact of loudness is already a given, then turn it on. It might help to play music, gradually elevating the volume. Same thing with anything that makes loud noises. Above all, show that you are calm. Don't mirror his anxiety; that will reinforce it. You stay calm and happy. It's quite alright for you to acknowledge that something awful has happened, like a truck has backfired outside your house-- he'll probably think you're crazy or debilitated if you completely ignore horrifying things like that, but treat them like 'Whoa, that was loud! Meh.' and you'll convey the impression that yeah, you know, and it's no big deal.
That's another big thing. Many nervous dogs are victims of information overload. They need to know where everything and everyone is, all the time, and if they can't, because there's just too much going on around them, they will panic. That's where you come in. Take charge. Make decisions. Understand that allowing them to dither is making them miserable. Show it in your body language. Hold your head high and your shoulders back! Talk kindly and confidently, not simpering and coddling. When Neo can't deal with the situation, he will be grateful to you for taking over the thinking business.
Another important thing: don't force him. Don't put him into situations that will panic him, or, if you must (like vet visits) you may need to look into gentle sedation. Forcing him into situations that will panic him is the same as backing him into a corner, and it could be dangerous. A panicked dog can and may very well bite, as might you in the same sort of state. Perfectly understandable. You wouldn't throw spiders on an arachnophobic friend. Or if you did, you'd deserve it if you got smacked in the gob.
Yeah, this all sounds like quite a lot of work. But here are some good bits.
If you can find things Neo likes to do, do the living heck out of them. Does he like other dogs? Great! Time your walks to meet other dogs. Does he like swimming? Great! Get some floaty toys and find yourself a swimming hole. Does he like playing 'find it' in the bedroom? Great! Do that. Extend 'find it' gradually to the living room, then any room, so the whole house is a game. Enjoy every minute. The more time he spends being comfortable, the happier he will be and the better able to deal when the awful things come up. You may also find that for all he is not well equipped to deal with the world, he has some surprising strengths. Play to those and you're well on your way. You may never work up to the little girl in the taffeta princess costume blowing bubbles-- but that's okay. The thing to do is cultivate peace and happiness. Since he didn't show fearful behaviour at the shelter, it may be that he learned to be comfortable there. Bear in mind that fearful dogs take a lot more time than others to acclimatise to a new situation-- sometimes really a lot more. It could be weeks or even months. With patience, you will get there.
Sorry this was so long. I hope it helps!