Just thought I'd toss in a few comments about the whole 'social phobia' angle. --Now, I'm not trying to say he *doesn't* have a social phobia, but it should not be assumed that he does. I would like to use myself as an example.
I am happily married, with a stepdaughter. I have been GMing a few campaigns from various game systems for 6.5 years now, meeting weekly online in the text-based program OpenRPG. At work, my coworkers generally seem to like me, and the feedback I get is that I do overwhelmingly good work. I am not socially inept, nor am I uncomfortable in social situations (except mildly and sporadically). I try to be as honest with and about myself as possible, and I am intelligent, well-adjusted, emotionally stable, and happy with my life. (And clean! I shower every day. : )
And I only very rarely interact with people socially, outside my immediate family.
Maybe once a month I'll go out on a social gathering, and while I enjoy myself some of the time, I find much of it tedious, boring, and exhausting. When the ordeal is over, I *need* quiet time to myself to 'recharge'. Except for my wife, I basically don't have friends--not in the true sense of the word. I go home from work, spend time with my wife and daughter, and that's about all the social interaction I have until I go back to work the next day. Same with weekends, except I get to spend more time with my family.
For a couple of years in my late teens/early twenties, I had a circle of friends that absolutely loved spending time with me. They'd call me up, talk to me, invite me to spend time with them, and I would have fun when I was with them. And yet, I began to get *very* stressed and irritable. Eventually, over a year or two, I figured out that I needed what I now call 'down time' that I just was not getting with all the demands on my time the socializing created. I ended up slowly and gently ending most of those friendships.
My wife accepts this about me, although she wishes other people could benefit from my friendship. She's constantly (but gently) trying to 'set me up' with guy friends. And it's not that I don't like the people I meet, or that I'm not interested in them as people, or that I'm afraid, or that I wish I could socialize but don't have the skills...
The motivation just isn't there.
*shrug* --I'm genuinely happy with my life; I don't feel like anything is 'lacking'. So I've just learned to accept that I'm fundamentally different from most people that way. Perhaps this friend of Olaf's is similar to me that way, just to even more of an extreme.
As to the odor problem, well, if he's anything like me, then if you were to sit him down one on one, talk to him gently and privately about it, and emphasize how much you don't want to hurt his feelings (that last only works btw if you genuinely mean it, and many of the posters in this thread would blow that caring test)...then he would feel awkward, embarrassed...and grateful that you would care enough to tell him so nicely, instead of dropping him or insulting him over it.
Just a few points for everyone here to consider. : )