Mutt
The mutt is a mixed breed dog with no pedigree. This is the state your dog starts out in. He has floppy ears, large paws, a stubby tail, and a snout that seems reminicent of a Bloodhound.
Husky
In Bowerstone Old Town, you can find a disreputable merchant named Murgo who will sell you items of a dubious origin. You cannot avoid meeting him as it is part of the main storyline. If you download the "See the Future" downloadable content (DLC) for "Fable 2," Murgo will sell you a potion that will turn your dog into a Husky. The husky has a thick grey and white coat, smaller paws than the mutt, and a long fluffy tail.
Dalmatian
Murgo will also sell you a potion to turn your dog into a Dalmatian. The Dalmatian is longer and sleeker than the other dogs, and has the iconic white with black spots fur. While all dogs are rare in Albion, Dalmatians are nearly extinct. According to in-game conversation, noblemen and women have hunted them for their pelts. In game, this is agreed upon as an evil, unforgivable act.
Bloodhound
The final breed of dog is the Bloodhound. Like the other non-mutt breeds, you can turn your dog into a Bloodhound by buying the Bloodhound potion from Murgo. The Bloodhound is more squat than the other dogs, appearing to be thicker in the middle, and somewhat lower to the ground. It has a brown coat, floppy ears, and the folds in the face that give it a hangdog expression.