I'm sorry... you don't charge for transition days? What? Those are the hardest days! Honestly, we should charge double, they're a pain in the Buttons!

I would suggest that if he's having this much anxiety over half days and you are this concerned about it, he will eventually transition, they all do, but this is going to take a while! Are you prepared to spend the time and effort and spend the money on the bottles and bottles of wine it's going to take to get through it?

As far as refunding the deposit... depends on what your policy is. Does it pay for first week? last week? When is he supposed to go full time? Only you can answer that based on your policies. If your policies are too loose to define if you should keep it or not then I guess this is a great learning curve... make your policies better and move on to the next one.