Wow -- what a lifesaver you are for your daughter and precious granddaughter! Kudos to you for being there for your girls.
Question: did the "I'm scared of you" thing start when you began working on potty training? Sounds like she's connecting it with that, so I wouldn't take it personally -- although I know that's hard to hear from someone you love so much.
Another question: Is "doing her business" referring only to pooping? I'm guessing it is. Many kids have a fear of pooping on the potty, so that is normal. If it's just pooping she's afraid of, I would let it go for a while. Let her use a diaper for poop and relax on the issue for a while to give her an emotional break from the pressure.
Encourage her and cheer for her every time she pees on the potty so she can start connecting positive emotions with the potty instead of negative ones. And I mean make a HUGE deal about peeing on the potty. Maybe start a "big girl potty poster" where she gets to choose a special sticker to put on the poster every time she uses the potty. It can be as simple as a piece of paper taped to the bathroom wall. Focusing on the postitive should be a great start and should also alleviate the "I'm scared of you" business.
After a while you should see her being more excited about the potty... maybe then you can very slowly start again with suggestions to poop on the potty. At this point my advice runs out, because this is where we are with my 3-year-old daughter, too. Sometimes she runs to the potty and poops but she often still either holds her poop altogether or waits for us to put a dipe on her. I'll watch your request for others' responses so I can get some ideas too!
Good luck!