I would say, speaking from experience, that he is wanting to go someplace higher with his technical skills, and that the opportunity to do so is not apparent at your company. Why doesn't he just leave? Well, maybe the "personal issue" people refer to is that his salary is adequate to keep his family fed, clothed and housed, and quitting to change jobs in this economy is dicey at best, so he's caught having to stay where he is to provide safety for his family and wanting to work on more challenging stuff.
Don't assume that because he is single that he does not have family obligations. He may be caring for an ill/aging parent. He may be sending money back to the home country. He may have child support obligations for a youthful indiscretion (which, if he is paying faithfully, I commend him for).
Skills
He was obviously talented enough at some point. He might actually be one of those hackers who only do well under technically demanding conditions. Treat this well, there are many companies who want this sort of fellow; the sort you can throw a hard problem to and watch the problem become an elegant solution.
Has he talked about using newer tools, newer languages? Things that your "corporate overlords" do not allow, such as Python or a version control system that is not VSS or CVS? Does he go to esoteric computing websites and belong to esoteric mailing lists? Do you know? If this is what is chafing him, the issue is not burnout, but rather sheer boredom.
I know, it pays the bills to build yet-another-input-form in asp.net with c#, with yet another object persisted to oracle. But at some point the self-enlightened developer will want to automate and abstract all that away, or even better, search for and adopt a framework that does it automagically.
Boring work
I think you just have boring work at yet another boring shop. I suggest that you need to talk to him about what he feels can be done to improve team productivity with better tools, better systems, better processes. Then let him loose implementing.
Research and development
You may feel that you can't afford to go off on tangents. Let me tell you something. You know why GM is in such a fix? because they did not innovate and keep up with the rest of the automakers. There is only one fate that awaits companies that don't innovate: bankruptcy. There are no other alternatives.
If your company has an innovator on board; a person of great capacities who seek to better their craft and lift the capabilities of computing, you should absolutely take advantage of that individual's skills and drive.
Termination and recommendation
You should not terminate the guy. The failure is within your company. There is a lack of communication, and there is a lack of leadership. I know my words may sting, but somebody needs to tell you. If you are unable to properly motivate a skilled person, then that is a management problem, pure and simple.
If his skills are no longer needed, then you lay him off with severance and a glowing recommendation letter.
If his skills are needed but he's not motivated, that's a management challenge. You need to find a way to motivate him.
That you have come here seeking advice is a good step. You need to improve as a manager.
Finally: let the pressure off the guy. Nobody performs at their best under pressure.