First, let me direct you to this article
from YogaTherapy.org. It is a rather detailed case study of someone sounding very similar to your student. It shows not only that continued yoga practice can be very useful, but it also talks about what poses may be better. The author, Barbara Sloan, also warns that "Any yoga practice that creates pain should be avoided. Practice needs to emphasize maintaining normal range of motion and increasing sattvic experience, reducing stress, increasing prana."
As you noted the cause of Diffuse idiopathic skeletal hyperostosis (DISH) is unknown (that is what idiopathic
means). Since we don't know how to cure it, all we can do is manage it. There are two key effects that we can treat: the chronic inflammation and the loss of range of motion. You mentioned Earthing Bands, and yes - I would agree that he should try these, not just while doing yoga. This is a cheap and effective way to reduce chronic inflammation and in the long term is better than anti-inflammatories and cortisol injections. He should ground himself at home too, and even invest in the bed sheet so he can get the benefits all night long.
The second thing is to regain range of motion and mobilize his back. If you want to continue to use Yin Yoga with him, I would focus on spine work, but gentle postures for shorter holds: Sphinx, Reclining Twists, Bananasana or twists and side bends while seated in Shoelace. Gentle forward folds could help too, like Butterfly. Of course, he should be free to explore all the non-spinal postures that work the hips and legs all he wants: Dragons! Square, Shoelace, etc. Don't forget the yang options mentioned by Barbara Sloan (like the Pawanmuktasanas
You also mentioned that he has trouble relaxing in the postures: this may be a great use of Yin Yoga - to teach him how to relax. If he can learn to play his edges and only go to where there is a manageable stress, and then at that point work with his breath and awareness to help let go of stress, that could be very valuable training for him. You can teach him the Ocean Breathing
technique if he doesn't know it already.
Good luck! Let us know how it goes.