Sounds exactly like the guy I knew. In writing, he knew it all, but had no reference to actually apply it. It sounds like many CS graduates, myself included; without applying yourself in a non-academic setting it's quite hard to be a good developer, because the projects simply aren't big enough or haven't had the man-hours applied.

It makes me wonder whether these hiring processes are built for people leaving university, and not necessarily for those that have spent a number of years as software developers. It's a good way to get those that "know" their theory, but it sounds like a terrible way to hire someone who is expected to be not just a competent developer, but talented.