The puffing up CAN be a sign of fear or aggression OR a sign of happiness. Right now, I'm thinking he's scared, everything in his life has changed and he can't understand what to do, what will EAT him, what will hurt him. Give him time. It sounds like you are doing things nice and slow right now, which is a good thing. Sit by his cage, talk to him, let him know he's safe, they understand more than you think

Keep his cage open when you are there so he can come out on his own, dont try to force him out (how would you like it if someone came in and dragged you out of YOUR house?), praise him A LOT if he does come out, move slow, talk softly, praise often

As for the pellets - give these companies a call ... they will usually send samples so you can find something your new fid (feathered kid) will take to ... some things they just don't like, but there are a variety of different things that may take Tito's fancy ...
Hagen (Tropican pellets and Gourmet mix)
-- 1-800-225-2700
Harrisons (pellets)
-- 1-800-346-0269
Lafeber (Nutriberries and AviCakes)
-- 1-800-842-6445
Pretty Bird International Inc. (pellets)
-- 1-800-356-5020
Roudybush Feed (pellets)
-- 1-800-326-1726
Ziegler Brothers Inc. (pellets)
-- 1-800-841-6800
Don't forget the fresh veggies and a little fresh fruit as well. There is a list of safe foods pinned at the top of the Diet and Health section
Healthy Foods Topic Try different things, offered a variety of ways, cooked, raw, chunks, shredded, mashed, cold, warm, and don't think just because he doesnt like something once, he wont try it if its offered in a different form. Just like us, some people like carrots cooked, others like them raw, others like them shredded (in lime green jello

), others don't like them at all...
Perches - a variety of textures and sizes is always nice, exercises their little footies by having different sizes/diameters/textures Just as you standing on a concrete floor all day would hurt your feet, perching on a single style of perch will tire their feet out.
Covering - thats a personal choice. It sounds like you put him in a quiet room when you leave for work, which is fine. As it gets dark outside, his room will darken as well and he'll settle down when it's nite time. As long as when you come home at 3 am he isn't startled awake by a bright light, he'll be fine uncovered in a separate room.
Toys - a lot of quakers CHEW so things he can chew up are good. Little wooden baby blocks, plain (or naturally colored) popsicle sticks, plain wooden clothespins (without the metal spring), many love to shred paper so kleenex tissue or paper towels are good, as is plain black/white newspaper (not the colored or glossy pages). You can also use the plain newspaper as a liner for the bottom on her cage to ease in clean up. Do NOT use 'litter' or cob bedding in the bottom of her cage
Bedding Article Newspaper is a natural bacterial barrier and its CHEAP .. a way to recycle

Again, not the glossy pages. A lot of birds like bells, some dont, I wouldn't give him a mirror tho....sometimes they bond with the 'bird in the mirror' and think that is their friend

then they don't 'need' you
I hope Tito warms up to you soon. It sounds like he will, just give him some time. You will have up to 30 years to love him!
Once he starts coming out of his cage and interacting with you without fear, you will want to work on 'Step ups' with him. You can take him away from his cage (out of sight) to work with him 10 to 15 minutes at a time a couple times a day is usually plenty. I used to take my IRN into the bathroom to work with her. Closed the door and toilet and it was a small enclosed space so she didnt have much choice but to work with me....it STILL took me almost 6 months to tame her down, so don't try to rush it. If you love him, he'll pick up on it and he'll get there with you.
Good luck with your new friend. Keep posting and let us know how it's going with you and Tito. We LOVE pictures and stories of others' fids, so post/brag/ask away!!