Aaaaaaaaaaaaaaaarrrrrrrrrgh!
So sorry.
When my difficult child insisted he couldn't read, (because his homework was too hard and he was stressed) I'd take him to the grocery store, where he would beg, of course, for everything. I told him that he could have anything he wanted as long as he could read the label.
Boy, was that a mistake! He ended up with-a bunch of candy. Good thing we weren't at CompUSA or something.
I like your idea that he make up stories about pictures. That's a good start.
Somehow, he attached the word "read" to something negative.
Can you place your son in a situation, outside of the classroom, where you can use the word "read" and encourage him to "read" in a fun way? Like, candy labels? Something basic, like, M&Ms. He surely knows the letters of the alphabet.
I have given in on that, even with-my son's reaction to red dye, just to get to the next stage.
I'm a big rule breaker. 
I am so sorry about the dr. That is SO frustrating!!!!!!
