POTENTIAL SPOILERS for folks who’ve not read IJ
I think there are many interpretations, but the most plausible to me is that his inability is linked to the mold he ate when a child (that flashback, narrated by Orin—“I ATE THIS!”).
DMZ is a super-potent hallucinogen derived from ‘a mold’, discussed by Pemulis a few times throughout IJ, and it’s mentioned as having a soldier sitting in his cell just singing showtunes, while inside his head he’s screaming for help (somewhere in the endnotes).
It might be that it has been somehow ‘activated’ later in life, or maybe its actually that the mold in some way granted him these extraordinary powers of erudition etc. and has now worn off.
There’s a bit where he’s talking to Stice, and Stice thinks Hal’s crying, while Hal is pretty confused as he thought his voice was totally neutral, so it looks as though he’s already slipping into it towards the end of our time with him.
I’ve heard other people say they think it might be a result of having watched The Entertainment after having dug it up out of James’ head.