We had a guy who's symptoms were almost exactly the same as the person you described a few years ago. We relo'd him from the midwest to the northeast, gave him a sweet salary, put him in a furnished hotel for 2 months while he slowly found an apt, etc. On his second day here, I drove past him leaving his hotel which was 200 yards from the office. No big deal except my day starts at 9:00 AM and his started at 8:30 AM. Late on his second day?

I kept an eye on him for a while and it kept getting worse and worse but we really needed him so we dealt with it.
We ended up letting him go after 2 years of this. A month after being dismissed, he confided in a coworker whom he had become friendly with. Apparently he was going through depression and it would hit him hard for a couple weeks at a time and then be fine for a month or two and then it would hit him again. Sad really. Wish he would have said something and could have gotten some professional help.