Bread has tough, crunchy crust but is underbaked in the middle - how to fix?
First off, there is a way bakers measure the proportions of ingredients that is pretty unique to bread—everything is measured relative to the amount of flour by weight. A ratio of 0.6 (or 60%) means if you use 10oz of flour, you use 6oz of that other ingredient.

There are typical ranges for these. For example, salt will typically be 1–2%, yeast (depending on type of yeast) ≤2%. Water will be between 55–85% (the low end is bagels, the high end is various artisan rustic breads), and typically 60–66%. Note that high gluten flours (like bread flour) soak up more water than lower gluten flours (like all-purpose), so they'll need a few % more water. The more water the looser and tackier a dough becomes (and, ultimately, becomes a batter instead with enough water.)

Please forgive me for working the rest of this in metric, it's what I normally use to bake. Yes, despite being American… The math is so much easier without having to do lb→oz, etc. conversions.

Your recipe has 9 cups of water, which is ≈2130g. It calls for a firm dough, and you're using bread flour, and hand kneading (which means you'll add a little more in from dusting as you knead) so I'd go with around 62%. That'd be 3435g of flour (2130÷0.62). [That's 121 oz, or 24 c. if you insist.] We can now use that to compute the baker's ratios of the other ingredients:


3T of yeast, according to an online converter is ≈29g. So that's 0.85%, which is reasonable.
3–4T shortening is ≈1–1.5%. Shortening (or fat in general) tends to make bread less chewy (think of a good baguette and how that has a chewy toughness to it—shortening lessens that.)
1½ c. powdered milk is about 100g, about 3%.
6T + 2t sugar is about 85g, or 2.5%.
1T table salt is 17g (0.5%). There is another gram or so in the powdered milk. Salt slows down yeast, and does various other things, but mainly it's for flavor.


Those all look pretty reasonable, so this recipe should work. (Personally, I'd suggest doubling the amount of salt in there, for flavor.) Also, it's possible that all-purpose flour might actually work better than bread flour, since you're not going for chewy.

Now, for some ways it can go wrong:


You're putting a lot of warm ingredients in your dough. Starting with boiling water (I have no idea why, honestly. Maybe to melt the shortening?). Then you add hot water, and finally some cold water. Unless "cold water" means "ice", the resulting mix is still going to be hot. You must not heat the yeast above 130°F. That will kill them pretty quickly. I'd interpret that "cooled enough" step to mean 115°F at most.
If you measure your flour by volume (cups), that's error-prone (you can easily put anywhere from 4–6oz/cup, depending on how you measure). A $20 digital scale is far superior and quicker, too. 
When you start kneading this, it's going to be tacky and stick, at least once you get all the flour mixed in. Try not to add too much additional flour while kneading—use only the minimum required to make it handleable. As you knead, even without adding flour, it will get better. You can use a bench scraper (or a pie server or even a table knife in a pinch) to help pull it off the board if it sticks.
If at some point during kneading it becomes stretchy and difficult, let it rest for a few minutes.
This dough should double (and no more) before you knock it down. Then you shape it (and there is a technique to that), and it should double again in the loaf pans. Be patient.
When done baking, the center should be at least 190°F, maybe even 200°F. If it's under 190°F, put it back in the oven. Feel free to turn down the oven if its browning too much. (Though I think your times are reasonable.)


Finally, almost all bread has a crispy crust after cooling fresh out of the oven. Once it cools, place it in a plastic bag for a few hours—that'll soften the crust.