Housebreaking a bichon

I need some advice with regards to a 12 week old puppy, a bichon frise, we have purchased over a week ago. At first she would eliminate immediatley when brought outside, now her behavior has become increasingly defiant only wishing to stay in the house and have accidents inside, even after being brought outside, given a command ("get busy") and given lots of praise and a dog treat after she does go. Much more frequently she is soiling her crate, she is given water in her crate but not food, she is in her crate during the night and for about 6 hours during the day. She is played with and adored from 3 - 11 pm everday. She is played with and adored from 6 am - 9am everyday. 9 - 3 pm is nap time, why is she doing this and why is she going backwards so speak, rather than forward in her training? How do I break her bad habit of soiling where she sleeps and drinks? Please help!

<<<<How big is the crate you are using? Do you think that is the case?

Does your pup pee in the crate during the night or only when left all day. >>>

The crate is small, suited for dogs her size, she has enough room to stand and turn around, that is it. She has had accidents in the crate during the night (I do not leave water for her at night) and she has had accidents in the crate when left for only an hour or so. I usually give her at least 1 hour to go after eating and drinking when I walk her to her special spot in the yard. At this point when she is brought to her spot outside she knows why she's there, I praise her quietly while she's going and say the command word a couple times, before, during and after she goes, I also use the leash and then when she's done going I set her free to reward her (is this a good idea?). Still, when at home, she does not let me know that she needs to go by going to the door or barking, I see her circling and sniffing and bring her out, otherwise she would find a place in the house and go.
At this point I have been able to get someone to come and walk her at 12, which appears to have positive results, since the day she was walked I came home to no unpleasant surprises! :) I hope it continues, I am worried that she will be unable to break the habit of using her crate as the place to relieve herself.

Thanks for responding,
Dawn

[quote=MikeB]
Better to use an Exercise Pen, an 8 panel wire pen set up on a tile floor with a potty area and water area.[/quote]

Won't having a potty area confuse her and hinder her ability to become fully housebroken?

Dawn