I'm guessing having lived in the UK for 3 years back in 2000-2003, he would have held ILR, and if he had applied for citizenship back then before returning to the US, he wouldn't be in this situation now. It's because of situations like this that we recommend applying for citizenship when you qualify, even if you plan to leave the UK... because you never know if you might need to return in the future.
Back when they first lived in the UK, ILR was free (a fee of £155 was introduced in 2003) and citizenship cost just £200. Plus there were no official minimum financial requirements for the visa.
These days, they're looking at at least £10,000, 5 years and 3 visas to gain citizenship, plus meeting the financial requirement for each visa.