Thanks again to everyone for their wonderful advice and insight. Boy am I on learning curve this month! It's been great, though, because I had really hit rock bottom, thinking we had a lemon and it was all going to be a disaster. After last night's ride, I'm starting to see what PoohLP was talking about. Both horse (Mattie, 12yrs ;) ) and rider (Mikayla, 9) communicated brilliantly. He did try his usual evasive tactics, but she sat her bum in the saddle and held him in place, and he gave up very soon and didn't try again all evening.
The others were doing a jumping competition, but she decided to just work him in the warm up ring as he refuses jumps. We had some NHS guidance from another rider and she learnt how to give him a command, rather than make a request - BIIIIG difference :)
* no inappropriate grazing or evading direction - one reign stops and insistent pressure worked brilliantly
* Mikayla kept a soft, quiet reign and a firm leg with no kicking
* walking quietly over a teeny jump without even looking at it (our friend had him popping over a bigger one nicely, too, just to get him going)
* trotting around without heading for 'homebase' at the car - even trotting toward the car, turning at the trot and going back the other way without a fuss! Wahoo!
Northern - your questions about love and commitment to training have been at the center of all my dilemmas with this pony and we talk about where we are at with each step, be it forward or backward. She is only nine, but she's more than that in many ways and has what it takes to stick with it, but only if she wants it. Last night pretty much sealed it for her. If she can get him moving forward like that, then each ride is an improvement and she has more and more confidence that she can lead him through these issues. Of course she just loves him so much more after each successful ride, that the more success we have, the harder it will be to part them. Not a bad thing, but it's a commitment for the long haul, I realise that.
Oh, and she had misplaced her new bridle last night, so she rode in the bitless!
We have contacted the dealers and let them know our issues. I am hoping they will step up and take him back for some more schooling, since I wasn't given his full history in racing and restarting when I asked. But my husband is taking care of all that.