Just keep plugging away. The letter-sound connection doesn't come all of a sudden in a flash, I think. It takes some time to figure out. It's a big concept. It's old hat to you and me, but to a kid, the whole thing is a big leap.
More than anything, I recommend you try modelling how the word is pronounced, then sounded out very slowly, then a little faster. In other words, whatever you're asking him to do, spend a good while doing it yourself and not expecting him to do anything. I did that
a lot for around a month (or more?), I remember, before he sounded out anything himself.
Alphabet books help a lot. If you want him to sound out the language he's got to be very familiar with the letters and the sounds they make. I'm sure
http://www.starfall.com/ (the alphabet pages) would help a lot, too, because they focus on the sounds the letters make. The first page of Starfall really reminds me of Doman presentations--check it out, it's free. You can use refrigerator magnets, too. Doing the same things in different places, using different sense modalities, will help make it all gel. Leapfrog has some handy products. They have several ones that do the same thing (you press a button that is in the shape of a letter, and the toy says the name of the letter and/or pronounces the sound(s) the letter makes). We have the Alphabet Bus, that worked pretty well. We also have the LeapFrog alphabet three-letter refrigerator magnet system, I forget what it's called. It helped a little, I think, but for whatever reason he couldn't make out how to use the toy (that was at about 26 months or so, I guess). He has since (at 33 months) figured it out, though. But earlier on, I am sure it could be handy for
you to demonstrate to
him what's going on. But frankly, I think that's a bit of a splurge, it's not cheap, and if price is a consideration, other things are more helpful. Plain old wooden blocks can't hurt, either.
Frankly, though it is not explicitly phonetic, I believe Dr. Titzer when he says "Your Baby Can Read" can help kids to learn the phonetic code. I just think it helps to go farther and clarify it more. But the point is that YBCR would probably help your boy pick up the letter-sound code. I say this because it features an arrow that moves below the word as it is pronounced. This is a really handy feature. This doesn't necessarily teach the full range of the phonetic rules, but I think what it
does do successfully is give a child the general notion of the letter-sound connection. By the way, Starfall.com and Literactive.com (free sign-up, well worth it) both have a similar feature as well, but YBCR is automatic and easier to use. The Starfall and Literactive "sound out the word" feature are better to use after your kid has started to read, I imagine. Literactive in particular is really cool, you gotta check it out. But again, I don't think either of these is an adequate replacement for YBCR.
Then of course there's
http://www.mediafire.com/Fleschcards ... don't expect him to sound out the cards himself right away. As long as he's making progress, it's OK if you are doing the sounding-out. I don't think my boy successfully sounded out any word until we were well into the sets. He did manage to figure out what a word was when I said something like "kkk--aaaah--ttt", and that's an important milestone. If he can do that, he's definitely making progress.