This is MOST definitely a dominance issue! Jaz is telling Taco that Jaz is the person in charge of this new house! And while Taco may not be fighting back, Jaz is going to continue this behavior until she is satisfied that Taco understands the situation. It is your job to help them get on an even keel. Is Taco a male or female? Jaz is more likely to settle down with a male (females tend to rule the house and males usually let them).
You need to go back to square one. Put Jaz in a room where Taco can not see Jaz. This could be a guest bathroom, or mud room, etc. You want a closed door between the 2 dogs for the next 3-4 days. Give each dog their own time with you – but separately. This allows each dog to become familiar with the smell of the other dog. They get to know each other this way – but without any confrontation.
On the 4th day, pick up all toys, balls, bones, and put them up out of reach of the dogs (and keep them up for the time being – this prevents fights over these resources. The toys belong to you, and the dogs only get access to them while you are there to monitor things). Then take the dogs on a long walk together – put leashes on them and then right out the door, don’t allow them to sniff each other or anything – just “let’s GO – walking here!”. By the end of the walk they should be more comfortable with each other.
For the next few weeks keep a short leash on Jaz at all times – let her drag it around the house and yard (I like to attache the leash to a harness for this). This allows you to step on the leash or pick it up to get Jaz away from Taco. Monitor their activities and head Jaz off at the pass when she is paying too much attention to Taco – you might want to teach Jaz ‘leave it’ and tell her to ‘leave it’ when she is looking at Taco, etc.
If the days of separation, and then the walk don’t solve the problem you will need to find a behaviorist or trainer that can come to your home and work with you – after all, Jaz is a terrier, and a Russell to boot. My experience is that Russell’s can be very challenging!
Other ways to fix in Jaz’s mind that she is not in control of the house is by not allowing her up on any furniture. Taco can be up, but not Jaz for the foreseeable future. Not on the sofa or especially the beds. Control food – make Jaz work for every meal and treat by sitting nicely, or by doing a trick. She also has to sit nicely to get access to any toy, and she can only play with the toy with you – when you are done playing the toy needs to go back up out of reach/sight.
These are the things I do with fosters when they come to my home – some respond quickly, others take months to decide they will settle into my pack. Give things a good 4 to 5 weeks before you give up on this girl!, but get some help if you feel things are not improving.
Good luck!
There isn’t one size fits all. It is based on many factors including age, lifestyle and availability. Please talk to your vet about options.