you should read about this abnormality and can get some good info by using the "search" option at the top of this page...type in Spina Bifida and you can read other recent conversations re this.
It IS a neurological defect that cannot be surgically fixed...the dog will have this condition for its lifetime. The choice you have to make is whether you are willing to take the extra time, trouble and minor additional expense to keep her in diapers and adjust her food for minimal waste. That doesn't at all mean 'starve her' but rather to choose the food type carefully, something that has lots of fiber and little "filler" so that most of what is consumed is used, and there is less PooP.
I don't know why a vet would tell you that you could not be present when a dog was euthanized...that doesn't make sense at all...its an injection that basically is an overdose of barbituates and causes near-instant coma and death. If he can't deal with tears and honest emotion he is in the wrong field...he should be selling magazines!
I also agree that the breeder should be notified that this pup has SB. Whether you want to return it to the breeder, or if they even offer to take it back, is individual and you will need to evaluate the information you receive. A reputable breeder will take the pup and most-often have it euthanized...an unscrupled one will take the pup back and sell it to someone else!!