First of all BIG BIG {{{HUGS}}} I have been there and done all of this...and still some days I am still hanging by a thread. (Mine are 12mo apart) You have a lot going on and I am hopefully going to address it all.
First-have you any help at all? Anyone that can come and give you a break by helping with #1 so you can focus on #2? Also, have you looked around on the PPD boards at all? I hope not to offend, but I sounded just like you at this point and I realized after the fact that I had undiagnosed PPD. We sometimes as moms put so much on our plate it is hard to see the light through the trees. Sleep training through BW is such a blessing, but it can also be a curse when you are trying to *make* it all work.
So, when I needed to do the resettling with #2, #1 was small and I did not know what to do, but I knew I wanted to BW as I did with #1 bc it worked so good. So, I baby proofed the entire living floor that I would leave DS (#1) in. I knew in my head he could be left for 10-15min and he would be perfectly fine. Now he is 23mo and I know I can leave him to read books, play his train, or watch Sesame Street for up to 20min alone. This gives me a pretty good window to resettle. Would you be able to leave your LO for that amount of time? If you prepare her and talk about it and let her know where you will be with the baby, she may be ok. This also gives you an amount of time where you can be present with #2 and just relax and focus on her. When you know there is an end time you may not feel so anxious.
Can you post their routines in EAS form...I may be able to help you align a nap so you can get a break. I can't promise...as over the last yr I have had times where they align, then we need to make a routine change and then I am back to waiting for the next change. So maybe some ups and downs, but there is hope and there are answers.
So just to clarify..are you both BF and FF? Are you giving a total of about 21oz in 24hrs? Is she swaddled? Do you have a good WD routine? Have you read the books?
Lastly are you also posting on the feeding boards? Does your LO seem to not want to eat and have pain when he eats?
Sorry so many questions but I really think you need a break and I am hoping we can get you one. I know I needed it.

Sarah