I was always an advanced reader but was reading alone by age 6. I think it makes the difference when you find something that really pulls them in. School reading books are boring. I don't remember a single one I liked until secondary school when we did Of Mice and Men. You'll find that his spelling and vocabulary improves dramatically with very little work if you can get him into books. The more you see correct spellings, the more you remember them. I've always found it's more effective than actually trying to work on spelling because it takes out the frustration with it and the feeling that it is "work." He sounds like he has the ability but just hasn't found anything he WANTS to read yet.
Has he tried the Ranger's Apprentice series? Written by a dad who wanted to encourage his own reluctant reader. I believe the son was aged 9.
Shivers books? I used to love Shivers at his age, my mum used to buy me one every weekend in the discount store.
What about Harry Potter? You'll have to help him with some of the big words but it's a good read and has the added pro of being "grown up" enough that he doesn't feel so frustrated being stuck with the baby books.
Often you just have to push them ahead of their level and help out with the big words and concepts. Otherwise you get stuck in a vicious circle of him not being able to progress because he is bored with the baby books but not being able to move on from them because he hasn't progressed.
My friend is dyslexic and I managed to help her start liking books by just handing her something I thought she would like that was age appropriate (I am well known for piling my friends arms up with books I can't help but recommend every time they dare to enter a library with me) and she started reading it in lunch breaks at college. (her reading level was around the age of a 10 year old. Her actual age was 17) At first she was constantly asking what words said or meant but that eventually stopped. Then she was as bad as me and we were constantly late back because of queues in the library. 
Wow I waffle a lot, don't I? Ah well, hopefully something in that lot was helpful to you.