One of my cats is incredibly timid - even now we can't pick her up (we think she was abused before we took her in). Oddly enough, we've found the best strategy was to simply co-exist with her rather than trying to get her to like us by fussing over her. She's gone from being a flash of white disappearing behind furniture when you walked into a room into a vocal little beast who will come and scream at you if she runs out of food. You still can't cuddle or pick her up or anything, but now she'll come to us for gentle tickles at arms length. She's never going to be a lap cat, but compared to how she was she's come on in leaps and bounds.
Kudos to you for taking in this little lost mogg, and I hope that you have many years of happiness together.