The main character is terrified about physical interactions.
In the first place he already struggles so much with verbal-only interactions and feels so frustrated by not being able to master them in the real world, that he creates a virtual world populated by copies of his acquaintances, where he is all-powerful and can control every aspect of the discussions and events that happen there.
His obsession with an old-time sci-fi series from his childhood, tends to suggest that he has issues accepting behaviors commonly associated with adulthood such as responsibilities (he is always late and does a poor job in preserving deadlines for his team), or sexuality.
He also is dominated by a sense of (illusory) duty and self-censorship that we can witness when he expresses his reluctance to join his new ship crew member for a swim during their last exploration trip to an exotic planet.
The episode does not give hints about the origin of this trait, but we can imagine that a particularly strict education could have impressed it on him.
Since he can control every aspect of his modified virtual microcosm, he chooses the configuration most comfortable to him, which includes a total denial of the existence of sexuality.