Pad training is more of a challenge because of what you have noticed, it is hard to emply positive reinforcement. It is not clear from your description what your long term goal is: outdoor or pad? Incorporating an exercise pen can be the link between going in the palace and having free run of the house while being expected to return to the pad. Here are a few suggestions.
Using the palace
For the first week or two the puppy should be in his crate, door closed if he is not actively engaged with your family. After this initial period you can go to using a small room (bathroom) or an attached play pen with the door left open. Many people try to go from the confined space of the cage to free run of the house and usually get frustrated with the accidents. Your puppy has to learn what you expect and how to comply. As he approaches 12-14 weeks of age and control over elimination is improving then free run can work. If you are to have him away from the crate you can also take the pad and tray with you.
play pen use
Since he does well overnight I would suggest that you don't change that routine. We have found adding a pen after the first couple weeks does make for a nice transition between just the palace and free run of the house, I would suggest using that to expand his environment during the day when you are not actively engaged with him, once he demonstrates that he returns to his pad from the pen then you can expand his area even further. If you are going to have him away from the palace and pen you can also take the pad and tray with you.