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Here are a few places that allow pets:

Safari Hotel at 13th Street is ocean front on the boardwalk. (http://www.safarimotel.net)

Clarion Fontainebleau - Ocean front, 101st Street. This is a great large property with lots of amenities. Most of the rooms are ocean and bay view. This is the only property on this list open year round (http://www.clarionoc.com/)

Barefoot Mailman - Ocean block on 35th Street. (http://www.barefootmailman.com/)

Windjammer Apartments - Ocean front, 46th Street. A nice older property with studio, 1BR, 2BR, and 3BR apartments. I stayed there for many years.Dogs are not allowed on the OC beach or boardwalk or beach anytime from 1 May to 30 September. Leashed dogs are allowed on the beach and boardwalk from 1 October to 30 April.

Note that dogs are not allowed on the OC beach or boardwalk or beach anytime from 1 May to 30 September. Leashed dogs are allowed on the beach and boardwalk from 1 October to 30 April.

Leashed dogs are allowed in OCs parks, including Northside Park at 127th Street. There is a dog park at 94th Street. You can get more info about it here: http://ococean.com/things-to-do/oc-local-parks-and-playgrounds/ocean-city-dog-playground

Dogs are allowed in certain areas of the beach at the nearby Assateague National Seashore, but not Assateague State Park. Here is the info from the National Seashore website:

Pets are permitted in the Maryland portion of the National Seashore. All pets must be on a leash no longer than 6 feet at all times.  
Pets are completely prohibited in the following areas:
- all backcountry campsites
- nature trails
- lifeguard-protected beach
- north of the State Park to the Ocean City inlet
- the entire Virginia portion of Assateague Island*

*Pets are prohibited in the entire Virginia portion of Assateague Island, even in your car. The U.S. Fish and Wildlife Service manages nearly all of the land area on the Virginia portion of Assateague Island as a National Wildlife Refuge.