Hi there and thanks for the post.
Toilet training can be very frustrating but the most important thing is to not give up and to be consistent.
So i prefer the direct approach no matter what the circumstance. It is far easier to do this and not have to worry about having heaps of steps in the middle.
The paper method can be very slow and frustrating for both you and the pets.
So take the dogs out to the grass area as often as you can usually around every 2-3 hours for a start works. Wait for 5-10 minutes to see if they go - if they do make sure to give heaps of encouragement.
I think a great idea might be getting some astroturf to put in an area of the house you want them to go. This will look like grass to them and help them keep the same consistent toileting area. Put it in a quiet, secluded but warm area and make sure to clean up the mess regularly so they don't get put off.
Now to the spraying problem.
Some dogs do this more than others. Is he castrated? Marking due to hormones is often the most common reason for marking so if he is entire getting him fixed will help this as well as a number of other health issues.
If not it is about catching him when he is doing it. Catching him and telling him off when he starts is the best way - use a loud GRRRRRR or AHHHHHH as well as a yank on the lead or a squirt with the water pistol.
Before you head into the pet shop make sure he goes to the toilet as this may help him hold off from marking.
On the areas he is marking make sure to use a good deodouriser after you have cleaned it up. Smell is very very important so use a product like SOX to help stop this.
Good luck and please let me know how things go and if i can help anymore
Todd