we have a new puppy shih tzu he is 6 months now but from when we brought him home after meeting on neutral ground my other dog a 4yr old bichon frise kept on snapping if pup wanted to play or if puppy was tugging at his ear he would tell him off. they now get along perfectly with the occassional snap, they will hopefully get used to each other it just takes time and patience.
also I would keep to the separating while you are not at home until you are 100% sure you can leave them together unattended.

always when feeding them, feed, play and greet Nacho first so he doesn't feel like percy gets all the attention (not saying he does) but may be this could maybe get them going or its probably just hierachy between then fighting for your attention


hope this helps