People's brains can have amazing deficits and positives. Kids with different deficits tend to be able to compensate somehow.
I think if I were you I'd get letter flashcards, and go at it as a game. All he has to do is name the letters, he doesn't have to do sounds or words that start with or anything. Make a game of it, and make it short. Like, 3 minutes.
Maybe go over 5 letters for a couple minutes. This is M, this is E, etc. Then lay out the letters, start the egg timer, and see how many seconds it takes him to lay out letters.
I don't know why he's not encoding the names of the letters. He can clearly recognize them. Does he have any other trouble with nouns - coming up with names of animals, names of people, etc? If you pointed to a variety of animals and asked "what is this?" can he do it?
I ask because nouns are stored in a separate place in the brain from other words, and nouns are particularly troublesome to remember. That's why in the beginnings of normal aging, people first lose the ability to recall nouns.
oops, "see how many seconds it takes him to name most of the 5 letters".
Good ideas by Rockrose.
I wonder if any of this is anxiety related? If so practice at home might help that. Also if he can say the sound of the letter, he is very close to saying the letter. And the sound is much more important.