Oh gosh, this sounds difficult to deal with. I work at a pediatric OCD clinic coordinating research projects and doing assessments with children with OCD, but I am not a mental health professional. However, this sounds very much so like OCD.

Your poor grandson sounds like he is suffering a great deal. And you and the rest of the family suffer along with him. First of all, here is a great kid's book about OCD that also has a parent companion book. This is written by someone highly respected in the field of pediatric OCD. I've been to one of her talks, and she is truly amazing.. http://www.amazon.com/Down-Worry-Hil.../dp/0967734703

Second of all, if you or his parents decide to seek help from a mental health professional, please seek someone who does exposure and response prevention. So many people come into our clinic having gotten useless, inadequate care. The gold standard for OCD treatment is ERP. It works fairly quickly and works very well. Simple counseling doesn't work. OCD requires specialized care.

Hope this helps.