These types can't usually think clearly under pressure. Besides, answering coding questions is very, very different from inventing those algorithms. It's a completely different way of thinking. That's why.
Now i for one dislike leet code and coding challenge interviews. I think it's silly, plain and simple. What i would look for instead if i was an employer would be curiosity. Nothing is more important than insatiable curiosity. A curious employee will learn everything about your whole stack in the first week... just out of curiosity. And if they do hit a leet code like problem during day to day work you best believe their curiosity won't let them rest until they've solved it, be if with prior knowledge and experience or without.
He was unable to execute a .py file.
A PhD doesn't mean that a person knows everything. It means they made progress in understanding in a narrow area. Might not have included Python.
It's almost certain some of then (maybe most of them) would have fared just fine if they were left with the problem alone, not in a high pressure setting like a job interview.