i think that 12 weeks is so young that not peeing inside is an alien concept, and it's to be expected that he doesn't get it, at all. It has to sink in gradually as a result of consistent teaching by putting him out, praising the behavior when he goes outside, using language like 'go pee' when putting him outside, and when he goes inside, if you catch him in the act, immediately indicating disapproval with a 'No, don't pee in the house, and carrying him outside saying 'Pee here.' and if he does, then praising him. When showing disapproval, keep it clear but not scary, suppress the true degree of anger and frustration icon_yikes so that you get the point across without making him think only about escaping you.
If you don't catch him in the act, just clean it up without saying anything and try to watch him closer. Putting him out often is probably helpful.
My daugher's Cavalier, Belle, did the same thing. They would go outside with her for long periods and she wouldn't go, but then would do it when she was back in the house. It just took time for it to sink in. I think she was about 20 weeks when she started asking to be let out and would just pee. Zack was just under 5 months.
With Belle, they used crate training in which they would let her out of the crate and put her outside and if she didn't pee/poop, they would put her right back in the crate. Later they'd try it again. If she didn't go, she was put back in the crate. If she did go, she was allowed to stay out with the family and hang out. I couldn't do that with Zack because he frequently peed outside long before he got the point that he wasn't supposed to also pee inside, but they felt it was useful with Belle.
I do think that Riley's behavior is perfectly normal for a 12 week old and that he has already started learning but he has much more to learn before he really gets it.
Linda's system with Dudley sounds great, what a nice spacious pen, and if you can watch him closely enough to teach him the way she did, it should go fast.
good luck, it can seem hopeless at a certain point. One day you will know the ecstacy of hearing toe nails scratching at the door and seeing him go out and immediatley pee, with many other small victories along the way.