I recently rescued a severely malnourished shepherd type 6 month old puppy. He lived his whole life in a very small crate, he has the hair rubbed off his shoulders from trying to stand in it and his ears don't stand all the way up (but they are better after two weeks). He has been vet checked, wormed, neutered, and is on heartworm preventative.
Thank goodness he doesn't have any neurotic behavior, he is a real sweet heart. My question is three fold:

I feed him a good quality food - IAMs Smart Puppy three times a day. It seems if I give him too much he gets diarrhea. If I feed more will the diarrhea subside?
At almost 25 inches at the shoulder he barely weighs 30 pounds. He has zero muscle mass, his hindend is just bones. Should I wait for him to gain weight or should I start an exercise program now? I dont mean run his legs off, just some walking or something to try to develop his atrophied muscles. Right now he has free roam of the yard and he usually just sits on the top of the hill and watches the world go by, only chasing the occasional squirrel or bird that lands in his yard. In the house he sits quietly by my feet.
He smells. I have bathed him five times and he still smells like roadkill. Apparently the abuse situation had plenty of deceased dogs around him and it has permeated him. His coat feels dead. I give him a shot of canola oil on his dog food. I have tried products that say will help his coat but nothing really helps. Its still brittle and dull. The only heartening thing is the little hairs growing back on his shoulders is velvety and a different color! Is there anything else I can do to help his coat?

Thank you. He is such a sweet heart. My life is better with him in it!

Canola oil is not good. Some people claim it is rape seed oil AOL Search results for "what is canola oil made from" (http://search.aol.com/aol/search?invocationType=tbff50ab&query=what+is+canola+oil+made+from)
I doubt it would have contributed to making your dog worse but it isn't curing anything either.

Flaxseed oil is good for skin, fur and overall health.
Switch to that as soon as you can.
Also hylaronic acid is great for an animals joints.

You could try a sea salt or some miracle soap
Natural bath and body skin care products for a healthy natural body and bath (http://www.natural-salt-lamps.com/natural-bath-products.html)

MIRACLE 2 DISTRIBUTORS (http://miracle2distributors.com/?gclid=CJaCn5LJx5ICFQIGxgodMTRRbA)

Try feeding him Flint River Ranch Dog food. This is a high quality food that is easily digestible for your puppy and won't give it diahrrea. I buy it online and they deliver within 2 biz days to your front door. You can also try giving puppy some scrambled eggs for his coat. This will help also.

Yes, try and give him a little walk around the yard but not too much. You definitely need to help get his muscles moving again.

The smell can be neutralized possibly by using human shampoo. I use White Rain Coconut shampoo on my Jack Russel and she does not smell at all afterwards. It costs $1 a bottle. It is as though that possibly the smell that is coming from the dogs coat could be whatever the dog had eaten before you rescued it and is still coming out of the dog now. Almost like dog sweat coming through the pores so to speak.
This should go away with proper food within a week or so. The coat should return to normal and not be brittle feeding the dog the Flint River Ranch food. This will also properly give your dog the much needed nutrients for eyes, skin, nervous system. It is the best food I have found ever for a dog. The Iams is not the best choice in my opinion.

Within 2 weeks your puppy should be on the road to full recovery. Glad you rescued a German Shepard. They are my favorite dog breed.

http://img.photobucket.com/albums/v381/RedHotChic/Skinny.jpg

Oh my that is sad but he looks healthy in his eyes and face.
If he didn't have that glow I would worry that he was on his death bed but he has life in his face.
You just got him so it may take time. I am sure he didn't lose all the weight over night so you can't expect him to gain over night either.
What did the vet say about his weight and health other than the tests?
It is good he was checked for worms and all so you don't worry yourself sick over all that too.
He does look like a sweetheart and he must love you to death for giving him a chance at a better life!

Regarding the coat, I would brush him on a daily basis to remove dead hair. Use a gentle brush as he may be tender right now. If the odor continues much longer you might want to discuss it again with the vet. There may be a yeast or bacterial infection.
I am not a big fan of using hair care products for people on animals. The ph is different and can irritate their skin. A gentle medicated quality shampoo will help treat the scalp and care for the coat. You may not be able to "wash" away the odor, there might be a need to heal instead. Here is a product my vet has recommended when my dog has had issues with her coat.
OxyDex Shampoo - 1800PetMeds.com (http://www.1800petmeds.com/OxyDex+Shampoo-prod2584.html)
I would discuss any supplements to your dogs diet with your vet. Best of luck to you both.

He's been vet checked. Did you discuss any of these issues with the vet when he was there? With a severely malnourished dog, I'd prefer to have someone who has seen the dog give advice. It may be that he needs special supplements to get him back on an even keel. Or it could just take some time to get healthy, and no special treatment besides good food and rest. But I'm not willing to say which way it goes.

Stick to the Iams puppy chow. Linseed oil (Flax) belongs in paint, not a dog's diet. I couldn't find Canola oil in my reference material, but I believe it is high in the linoleic acid dogs need for their coat. Actually plain old cheap corn oil is as good as anything except safflower oil. Any website suggesting any problems with canola oil is likely backed by kooks or funded by the linseed oil producers. We have some clever marketing, rapeseed oil is now known as canola and the flax growers are trying to hide linseed oil's past paint history by now calling it flax seed. Searches done by those knowing little of dogs often turn up sites that smell worse than your dog.

Skip the baths and stick to daily brushing. If the odor doesn't improve, check with the vet.