Hello, I'm Dr. Kara. I have over 20 years of experience as a veterinarian and I'd like to help. Please give me a moment to review your concerns.
I do think that starting with a physical exam, looking especially closely at his eyes, his joints for signs of arthritis and checking some blood work for underlying internal organ disease is a great place to start.
Dogs that aren't feeling well or having health issues tend to change their behaviors.
If we can change the way he is feeling perhaps he will be more sociable.
I also think that you need to change his status in the house. For now I would restrict furniture access. Dogs that are freely allowed on furniture often feel they have equal power in the home. If you want him up that can still happen, he just needs to be invited first.
I like a program called nothing in life is free. That doesn't mean that he gets less love or attention, it just means he "earns" it by behaving, doing as he's told and respecting his place in the pack.Here is a link discussing the program: http://k9deb.com/nilif.htm
As you have seen scolding a dog doesn't work well. They need to feel physically and socially comfortable to want to socialize and follow through with a particular behavior. Positive reinforcement, and trust that he can get away if things seem out of hand may help his behavior tremendously.
He is an older fellow, and as such he should get a little more freedom to avoid social situations if he isn't feeling up to it. So he should not be backed into a situation, as dogs that are feeling intimidated will bite defensively. His warning (showing teeth or growling) is telling you he is not comfortable. He would prefer not to bite, and in reality is trying to get out of having to bite by giving a warning.
In cases where older dogs behave this way I tell owners that the dog needs to be able to get away, and have a place that they know they are safe from unwanted harassment. Just as you would not expect an older relative to put up with children crawling all over them, neither should your older fellow have to put up with overly aggressive play at his age.
Children are scary. They are loud, move strangely and unpredictably, and often are overly aggressive in their "loving" behavior. He sounds like he is anxious about being hurt and is warning them away. Bigger breed dogs may be more forgiving and be able to withstand clumsy attempts at affection, which may be truly painful for him.
Of course you wish he would be more forgiving of children and puppies. But there may be physical reasons for him not to be so. So addressing those, and giving him a chance to get away if he feels overwhelmed may make both of you much, much happier.
It is possible that his early years without proper socialization with other dogs led to his inability to properly read other dog's social cues, increased anxiety and inability comfortably interact.
The important part is that he accepts your child and sees her as part of his family. I would be much more worried about him if he was aggressive with family members. The fact that he tolerates her tells me he trusts you to teach her how to behave with him, and allows him to forgive some of her behaviors. Let me know if you have any questions after his exam.
You are very welcome, take care.