From what you describe, it sounds like the student may really be sub-par.
- Attempt to determine if the student is doing sufficient outside prep (chair flying, listening to ATC freqs, practicing radio calls, etc.)
- Use the sim, if you haven't already, to solidify his comfort level with various IFR tasks before going back into the airplane.
If this doesn't work, you have to look at the students goals:
- Commercial wannabe: You may have to explain to this guy that his odds of making it as a professional are low. IFR is the meat-and-potatoes of professional flying, and a low aptitude for multi-tasking is not a good thing. It is possible that he can eventually "get-it" by spending extra time and money training, but his first airline job will NOT provide extra training when he struggles with the simulator.
- Recreational Pilot: If he's willing to spend extra time and money, he may be able to get it done by brute force. HOWEVER...he needs to be warned that his low multi-tasking ability makes him a high-risk IFR pilot...ie he needs to be VERY careful about using his ticket in IMC, if he uses it at all.
It's blows to have to have this conversation, but you owe it to the student to provide an honset appraisal.