Poor little guy! This whole process must be so overwhelming for him.
Did you say for the past 2 MONTHS you had to stay with him in school?? Oh no. Please tell me that is a typo. Something is very wrong. When he sat on the floor alone, was he invited to play by the staff? Did they do anything at all? Frankly, I am not happy with the fact that they asked you to come in to stay with him. What if you cannot not come in? What would they do? It almost sounds like your son is being treated like a hopeless case - we can't handle him, he needs his mother! I am very, very suspicous of this place. A day care/school is supposed to help your child adjust to its environment without you.
As a mom who has been through some less than pleasant experiences with day care, I say, first, scrutinize this school. Not all places are able to accomodate children with different personalities and needs. Some kids adjust fine, others are slow to warm up, like my son is, and your day care needs to recognize and respect such differences. In my experience, I encountered some providers who applied a one-size-fits-all approach, just letting the slow to warm up kids deal with their stress alone rather than providing gentle encouragement and a few extra hugs and kisses. So, that said, I would discuss your concerns with the staff and ask specifically what THEY are doing to handle this situation with your son. Does the staff have concrete ideas on how to handle your son's upset behavior? What have they done in the past with other children who were like your son? Ask lots of questions. I would also drop in, unexpectedly, and see what's going on. Finally, I would spend several hours with your son at the school, at a time when you are usually not there, and see how your son's upset behavior is being handled.
If you find nothing of concern (I doubt this), then I would pull him and have him attend next year. There's a good possibility that he may mature a lot in a year, and therefore be better able to handle the school environment.
I see where you are going with the socialization thing. He does not seem to be around other children much. But that does not justify, IMO, this school behavior. Because you say he is normal academically, right? So I am assuming he is bright and developmentally normal in every way. He should be able to adjust to a new environment just fine. He may be a little slower than others to do it, but 2 MONTHS? Sorry, but no.
My mom had always told me that the right place for your child is one where he happily separates from you at the start of the day. She was right. After three centers, I finally found a place where he is truly content, and I see it in his attitude daily. His old day care repeatedly told me that he just didn't like to play with anyone - he was a "loner." That just wasn't true. Now that he is in the right environment, he is blossoming, and now I am told he is funny and bright, and sings shamelessly out of tune during music time. This is the same child I see at home. This is how it should be when you separate from your child.