daisy, here are some links to people who will give you the best advice for rescue dogs from this breed:
http://www.freewebs.c...germanshepherdrescue/
www.germanshepherdrescue.co.uk
I would talk to them about the problems you are having with this poor dog, as they will know the breed best and will have seen many GSDs with anxiety issues. I certainly would stay well away from any shock collars or in fact any kennels at this point. This poor dog needs to find his trust in humans again and he will need to very gently be taught that being on his own for an hour or two is OK. I too would get a large Cage / crate put some good thick vet bedding in it, attach a water bowl to the inside and gently train him to feel secure in it. Then he can go in it when you go out and he will be fine. Make sure you give him something to chew on when you leave him in the crate, i.e. a nice raw meaty bone or other dog chew like a stuffed Kong. The way you can train him to like the crate is to place a treat in the door way of the crate and show him he can take it. When he does, praise him. You can also use a clicker to do this training. Each time, put the treat a bit further into the crate and each time praise him when he gets it. Once he is all the way in the cage shut the door give him a treat and shut the door a little. Keep doing this until you see he is not worried about being shut in. It is also good to leave a radio with music on while you are away and safer than leaving the TV on. Once he sees his crate as a good thing and he knows he will get a nice big bone to chew on while you are away, he most probably won't bark anymore. It is a game of patience, but one that will pay off, I'm sure! Best wishes for this young boy!