The thing with dog training is that once you start reinforcing a behavior, the dog will offer it more often.
In your case, since you have been training the lay down - he has learned that he simply has to lie down to get the treat.
So from now on, forget about training the lie down and focus on reinforcing him only for sitting. If he lies down immediately when he sees that you have treats - you should still be able to lure him into a sit position. Bring the treat to his nose and bring it upwards towards the ceiling, until his two front paws are straight and he is in a sit position.
Another option is to get him to stand again. Whenever he lies down, you can call him to you or wiggle a treat in front of him until he gets up to get it. Try reinforcing him only when he is standing up and walking. After you do a bunch of these exercises your dog will no longer immediately go into a down position and you can start the sit work.
Hope this helps :dogtongue2: