Tess (and others) has given you excellent advice.
I just wanted to emphasize some points on the rewards--like Tess said, keep praise/pet slowly/calmly--if you were to "praise and pet her like crazy" or to the effect of what your father said, you'll get her amped up. Petting them in general gets them excited because we are using our "paws" which to a puppy often means play time.
Re: food rewards, don't give up on them! The kibble suggestion is great, especially since she's just a pup and you have her on LID for health reasons. Different rewards have different values, so it's good to have a variety on hand. Also, keep them small--you don't have to buy them small like the Milkbone Minis, you can break them up.
Think of them like "pieces of information," and if they have to chew/crunch on them they're probably too big. Do you know what Zukes are? I don't even give my adult dogs those whole during training! I break them in 2-3 pieces. The only time I give any treat out whole is when I'm giving them out "just because."
Also, a note on the Milkbones, if you've chosen a special diet for health reasons, look for the same qualities in the treats you are giving her (ie certain/lack thereof ingredients, dyes, preservatives, etc.) (Otherwise, you'll be adding back in what you've been trying to take out.) Biscuits in general are fairly low value in most training situations, and they take up more belly space because most (at least with grains) expand.
This thread will give you an idea of options for treats, just make sure she's still eating majority puppy food and not filling up on these: https://www.dogforum.com/dog-food/wha...raining-26952/