Try putting a little treat by the leash - just roll the leash up or make it as small as possible and put a treat near it - start as far away as you need to and then each day, set the treat a little closer till you get the treat on it. I don't know if it'll work, but it's worth a try. We have a dog (a rescue) who was scared of men... except for my husband. We ended up hiring someone to come in since our dog wouldn't have survived obedience school. Any way, the trainer had us dice up a hot dog to keep in the fridge to pull out whenever any of our male friends would come over. We'd dash to the fridge and grab some bits to have our friend(s) stand in the doorway to give her goodies. We kept it up until she got used to the fact that not all men are ogres.
Just thought maybe it might be a way of getting Sugar used to the leash. I suspect whoever had her before used a leash to punish her and that's why she's terrified of it.
Another thing to try, and it'll sound corny, but maybe braid a leash out of many strands of yarn with her watching?
I applaud you for adopting a rescue!
,
Einna