I have a 1.5 - 2 lb breadmaker and I tried this recipe a couple of times, but I made a few adjustments because my bread was either rock solid (the milk version) or overflowing (the water version).
Here's what I did, and it gets a perfect (for me anyway) loaf every time.
For the water, I fill my 1 cup measuring cup (anchor brand) to the top just enough to handle it without spilling it, and heat it for 1 minute in the microwave before pouring into the pan. Then I take some coarse kosher salt and pour what looks like 1 teaspoon worth into the cup of my hand and pour that into the pan. 3 slightly less than full tablespoons of sugar, and 2 tablespoons of canola oil. I use 3 cups of flour, and instead of using 1 heaping teaspoon of yeast, I found it to work better for me to use 2 half-teaspoons heaping of the breadmachine yeast.
This works absolutely perfect for me every time.