My sister exhibited the exact same issues with spelling as your son, and at nearly the same age. She was always very smart: math came easily to her, her reading level and comprehension was well above the grade average, and she generally did well in most subjects. But it was very clear from 1st grade on that she could not spell, and absolutely not for lack of trying. The school had her tested for learning disabilities, and there was nothing. They sent her to special private tutoring which also yeilded little to no results in spelling. I myself spent hours teaching her, as did my mother and father. We tried everything in the book as you have, from computer spelling games to flashcards - and the end result is the same. Even though no one was ever mad or dissappointed that she couldnt spell, so much focus and attention was spent on this one thing she could not do, she became very anxious and sensitive about it which certainly does not help the situation. And the end result? She just cant spell. Her brain does not spell, and despite trying to memorize all of those strange nuaces of the english language, it does't stick. Some people can't do math, and some are horrible at PE. Other children, like my sister and your son, can't spell. It is not his fault, and his teachers need to understand that this is just one of those things unique to your child: my mother was able to make sure all of my sisters teachers knew about her spelling issues, and she was allowed a little bit more leniency when it came to certain things. Essays she wrote were not graded on simple spelling mistakes, but on quality. She was allowed to use spell check, and her spelling tests and words did not make up as much of her grades as others. She sometimes was given different spelling words and tests that were more appropriate for her level.
She will graduate high school this year with a 3.2 gpa, which could be lots worse seeing as that she couldn't spell her way out of a box! Having a good spell check program on your computer is the best thing you can ever do for your son, and if you speak with his teachers, Im sure that they will be willing to make some allowances for his spelling deficiet. Have you had him checked for learning disabilities? He may also suffer from dyslexia, or even have a vision problem. If these things have been ruled out, know that spelling becomes less important as he progresses in school, and by the end of elementary school, students are almost always required to do all homework and essays on the computer, which means he can use spell check to his hearts content.