I had gone through a similia experience as well. To keep a long story short we had a Ranger/Rouge that decided he no longe liked combat. He used to be teamed up with an Rouge/Fighter and the two would scout ahead and such. However where that fella left; meaning Mr. Ranger/Assassin took point alone things changed. Keep in mind that we were all 12th+ level; and he had maxed out hide and move silently skills as well as a disgustingly high Dex Score.
One day we had to head down a set of sairs to enter into a dungeon. There was myself (an armor clad fighter), a second fighter (armor clad), a cleric (also clad in metal armor), and two wizards. Obviously who takes up the scouting position? You guessed it...
He actually said "I'm not going first!"
I replied: "Why - exactly what is your character good for here then?"
Now; when we entered combat he would run to the edges - "I am waiting for a chance to flank" was one excuse. He did not flank; he was more concerned with NOT taking damage. As a matter of fact to save his own arse he actually did not come back one time to tell us that baddies where up ahead (he was afraid of being seen going back). That made it real ugly.
What we did:
#1 My character (which was "in-character" for him) told Mr. Ranger/Rouge to shape up or watch his innards spill onto the floor - reminding him that his Sneak Attack damage, given the multi-class, was no where near good enough to take me down nor was his BAB fo the same reason. The other players did the same in their own ways - referring to fireballs, inflicting moderate wounds, "ginsue", etc.
#3 In-character we refused to give him a share of the loot - each of us tossed him a gold piece to be nice.
#4 Out of character we refused to give him a share of the loot.
#5 The DM, after (previous to the items above occuring) talking in depth with the rest of us also gave him the "correct" amount of experience; which was damned near zero. He did get some for remaining unseen during combat however!
#6 My character, after a long argument, and receiving a threat of assassins coming his way summarily smashed the Rouge/Ranger to litle tiny bits while the others laughed.
He then left; angered at us - we did not care. The game was better. EH knew why we did what we did and he was warned out of character and in on various occasions spanning 3 or more months (we played bi-weekly).
I suggest the same approach:
#1 Warn OOC
#2 Warn again OOC
#3 Warn IC
#4 Warn IC again
#5 Tell DM - then act on it.
