1. He knows how to do extremely specialized things in an existing environment, but can't do things outside of that environment.
2. He was presenting work that he had only a partial hand in creating.
3. He is amazing at e.g. C++, but cannot learn even rudimentary new things in Javascript.
...
Some of these stories make him a terrible programmer. Some of them make him an OK programmer for other positions, but weren't relevant for us. None of the stories make him a particularly great programmer.
"Perhaps he really was a very talented developer but your coding exercise was too stressful for him"
Yes, it's possible. A lot of things are possible. But I'm sorry - if someone can't copy-paste a 3 line program from the internet and get it to work, in their own field, for 2 hours, then... I don't know how I could ever design a test on which they won't fail. Including the actual job.
Perhaps he really was a very talented developer but your coding exercise was too stressful for him. Shame you missed out on hiring him.
This is not a story to show why we should do coding exercises. It is a story to show why they sometimes don't test the right thing.