What happened to Dms being able to say "No" to an over-optimized character, or a character/player who doesn't fit with the group? Seems like 95% of these "difficult player" threads can be solved just by saying that.

One of three things happens.

1. He says ok, plays a less optimized character who meshes with the rest of the group, and all is well.
2. He says ok, and then present yous with yet another overly optimized character to play. You say no again. He tries again. Repeat until he stops giving you overly optimized characters.
3. He gets pissed off and quits playing with you. So be it. You can still be friedns outside of D&D. You can't pander to him at the expense of the other players.

In conclusion, learn to just say no to things you don't want in your game. You're the DM. You can do that. It's really easy, and it works.