@Kool ******
The reason for the refusal has been explained in the Thai Visa immigration forum. The crux of the problem is that the applicant is trying to get a Non-O visa (note well, a visa, not an extension). He arrived in Thailand with visa-exempt entry, not on a Non-O. in Thailand. The applicant has ample documentation to support an extension of stay, but he is not trying to get an extension of stay, he is first trying to get a Non-O visa. The problem as explained in the other forum is that when the English-speaking embassies decided to get out of the income letter business and stop providing them for their citizens, Thai immigration came up with the monthly deposit scheme as a workaround. However, they did not go back and retrofit that workaround into the process of getting a Non-O visa in Thailand. The ONLY legitimate ways of getting a Non-O visa in Thailand are to have 800,000 baht in a Thai bank OR to have an income letter from your embassy (note the monthly deposit workaround is missing from the regulations).
His immigration office is balking at giving him a Non-O because technically as the law is written he doesn't qualify for a Non-O using the monthly deposit method because the monthly deposit method is not mentioned in the rules for getting a Non-O. If by some miracle he were able to get the Non-O issued, then with the evidence he already has he would have no problem getting a retirement extension based on the Non-O. But he doesn't have the Non-O and he can't get one using the monthly deposit method.
This would be a great time for the immigration officers in charge to use their discretionary powers to waive the requirement that it be a lump sum 800,000 or an income letter, and allow the applicant to get a Non-O visa in Thailand. Frankly, it will probably take an agent. Unfortunately.