Any input on 'protective' dog.

We recently took in a dog who went for her owner's toddler. She was originally a rescue dog from a pound, and other than being extremely aggressive in the car, has been the perfect family dog. The owner was stroking her when their toddler came towards them and she went for her. The owner was devastated, so we offered to take her to the sanctuary, if they were happy to sponsor her ( we are stretched to the limit here).
The owner feels the problem is a dominance issue, while I think it's more of a protective issue. They did consult a behaviourist who said that you can never trust an aggressive dog, which is probably true.... But at the same time I feel you can certainly reduce the issues.
Any ideas about how we deal with this. She's quite a loveable dog, gets on fairly well with the others and very needy for attention.

IMHO I think some dogs even with biting histories deserve a chance. My Sophie would not be safe in a home with children, she is unpredictable and has a strong prey drive. But I do not have young children or grandchildren and I keep her far from schoolyards and playgrounds.
The dog you're talking about might be the same way. Very happy in a home with adults who understand she needs to be kept from kids for everyone's safety. But that has to be clarified before she's adopted.

Could be jealousy or overprotective, hard to say without either all the salient facts or actually being there to witness the event. I don't like children particularly, and tend to keep away from them. Feel sure the same thing would work for the dog.

If the dog did not warn first then it is 99% likely that the dog has been punished for growling in the past to such an extent that it has stopping warning & is now fear aggressive.

Apart from ensuring that the dog is never put in a position of failure re children, this dog will need to be given self confidence & learn to trust again. Without actually seeing the dog it is hard to give correct advice.

Possibly seek out a positive behaviourizt or dog trainer so give you a full assessment & the correct advice

What do you mean by "extremely aggressive in the car"?
Elaboration may give people a clearer understanding of what is going on.

My knee jerk reaction, based on the words "needy for attention" and the note that the previous owner was stroking her when she went the toddler, is that there's a resource guarding issue (could be called jealousy) . But that doesn't mesh with "aggressive in the car".

If she gets in the car she would bite if you try to take her out, she will not leave the car, she would attack the owner's other dog in the car, while being fine with her outside it. The owners had to crate her with a lead, so when taking her out they had to quickly open the crate door and pull her out with the lead which was attached to her and clipped outside the crate so they could pull her out. She escaped from our house once while we were looking after her, and ran into our friend's car which had an open door. I would have been bitten if I had tried to reproved her, I have never seen anything like it.
I had to try and loop a slip lead over her head, each time she grabbed it, and I managed to pull her out while she was biting it. As soon as she was out, I shut the door and she was back to being a happy, friendly little dog. She is a springer spaniel.

She is definitely one scared dog & has learnt that being aggressive keeps the fear away. You definitely need "hands on" help, with a positive behaviourizt or trainer. It's impossible to help at a distance sadly

absolutely agree the poor thing is one scared very insecure little spaniel