If I were the guest with a dog having accidents, I'd be appalled and mortified. I'd clean up everything (and return to clean spots found later, if I lived within any reasonable distance), replace anything damaged, and either not take the dog back to that home or come up with a rock solid plan to avoid further accidents if I did return with the dog. I have two dogs, and one of my biggest concerns when I take them anywhere is not doing anything that would contribute to a dog-friendly store changing its rules, a person learning to dislike/be afraid of dogs, etc. I want them to be good ambassadors for their species so dogs will continue to be invited into various public (and private) places.
I don't think there's anything wrong with corralling a small dog in a space the size of playpen for reasonable periods of time. (Or even a large dog who is crate-trained. But I wouldn't go for more than 4 hours without a potty/play break.) An anxious dog like the one you describe might actually prefer to have a snug, safe space, maybe with a t-shirt his/her favorite person has worn, a couple of toys, something to chew, some soft music, etc.
Dogs go through a socialization period early in life, and if that window is missed, they often end up with problems -- separation anxiety, fear of people, fear of other dogs, fear of various noises, not knowing how to "dog" in some ways (chewing, playing, etc.). That might have happened to the dog in question here. And I wouldn't put too much weight on this dog not doing things like sitting when you ask, taking a bone from you, etc. Some dogs are just too overwhelmed by new people. (Edited to add: Socialization doesn't just mean literally socializing with people and dogs. It means getting used to anything and everything in the human world -- noises, different surfaces under the feet, different types of buildings/vehicles, all sorts of smells, and yes, all the different shapes and sizes of people, dogs, and other animals.)
And although this probably doesn't apply to this dog... just so you don't go around judging other people's dogs :-)... some dogs are trained not to take things from anyone but their owner or do anything another person asks of them. My younger dog only responds when you say "Name, command," so if you don't know her name, or that you're supposed to say her name before each command, you can't get her to do anything. In her training class, we even take turns pulling on each other's dogs' leashes while they're in a sit-stay or a down-stay, and they learn not to get up unless and until their owner gives them the release word. I'd never leave her sitting outside a store like some people do, but it's nice to know that in case of emergency, I can put her on a stay while I run and grab something, help someone, etc.
Sorry... dog lover tangent. Just trying to advocate for the super-well-trained dogs who might not always seem well-trained because part of their training is NOT to do something when just anyone tells them to.