S.M.
Hi, N.. Well, I think you need to keep the toddler from being alone with the dog. Toddler doesn't understand how to treat the dog -- he's not ready to be responsible for an animal yet -- and sooner or later, the dog is going to get fed up with the todddler and get back at him. No fault of the toddler's or the dog's, but the two of them are not going to be best buddies yet.
Now, if you want them to end up as best friends, then I would suggest never leaving the todddler alone with the dog as long as he is a toddler. If he keeps getting punished for playing with the dog, he's going to resent the dog because the toddler just doesn't understand what he's doing wrong yet. He can't remember all the rules yet, and he isn't capable of putting himself in someone else's place. Therefore, he ALWAYS has to be supervised with the dog, and never left alone with him. He's going to have to have an awful lot of modeling from you and others before he understands how to play with the dog. The toddler doesn't have even the motor skills to know when he's touching too roughly. He doesn't have the self-control. It's no his fault, but he can learn eventually.
Have patience, and always be in the room when both of them are in the room together.
I hope the boy and his dog learn to really love each other.
Peace,
Syl