This is part of the crux of the problem.
Yes, he's running the chat room on employer time. I believe he sees it no differently than listening to an MP3 player, etc., because his hands are free to work. The problem is, I'm often finding him holed up in empty classrooms chatting away, talking to the people who lease space from us, or just standing in the middle of the room looking around because he's so busy talking, I think he can't figure out what he should do next.
I'm not his supervisor, but I do supervise his work. He's slower and accomplishing less. I'm also seeing the "looks" from people when he goes walking by just chatting away on company time.