There are several potential solutions...
1) talk with him about that behavior.
1a) bounce him out of the group if he won't stop.
2) embrace the in-character play, and quit trying to impose a story.
3) place a few stories that highlight his fixations, and encourage others to "return the favor" ... in hopes he sees how distorted it might be.
I'd honestly suggest trying #2. It may seem counter-intuitive, but the player is in fact not far out of line for a FATE system game. FATE supports strong player participation in plot creation, both by letting the GM know what buttons they want pushed (via aspects), and by truth creation and declarations.
To make your question short, and to see if I understood it correctly, we're talking about a player who made his character a certain one and roleplays it entirely different. You added that you think that it comes from inexperience, and that he created this character after you said "no" to some "freak-character"-ideas. You want to help him roleplay the character he created.
As I see it, this problem is made from two smaller ones. The first is that he doesn't see his character as interesting because the character "is normal and normal is boring". The second is that you wanna help him understand why the way he plays the character does not fit the story-world of your game.
Helping him understand that "normal is not boring
This is the more important problem, as it stands in the basis of the entire problem. If he'll see that normal characters can be interesting his "anti-persona" will perish and he'll roleplay a normal character and not a freak one. The main trick here is to show him that normal characters are not entirely normal, i.e. "no person is like the others". In order for that to work, we need to give the character depth.
The easiest way to give depth to a character is through internal conflicts. Having goals and all is nice, but without something that blocks oneself from achieving them it is far less interesting. First thing to do is to go over his character's background and see if he implemented there an internal conflict for his character. If so, show it to him and talk with him about it. If no, sit with him and help him to come with one. The internal conflict doesn't have to be extravagant, but it needs to be there. An example one might be that he loves Vincent's sister but secretly hates Vincent himself, or another like Loves the sister but thinks that he's not good enough for there. I'll take the second one as an example for this section.
The conflict gives us a few things, a few added benefits. It gives the character 2 conflicting goals: "Get the sister and prove that I'm worthy". Now, with those two we also get a kind of an achieving-plan: "If I'll show her that I'm worthy, by getting something amazing done, she'll want me and I'll be able to get her". More than that, the character gets the knowledge that each advancement in order to achieve one goal will drive the other one to the far end.
But the first conflict is even more interesting. The character here has the knowledge that he needs the brother in order to save his lover, but he just can't stand being near the brother. He'll drive the mission onward for two reasons but he'll have doubts about his lover- if he'll marry her he'll be stuck with this brother of hers.
To make long story short, simple conflicts can show the player that even normal characters are interesting and unique. When combined with goals they force the character to take certain steps along the roads, to commit certain actions along the way, that he won't want to do but will make him doubt himself and question himself and see that his problem are far more interesting than those of every freak that he'll encounter.
Another nice way to help him see the importance of conflict is through showing him and analyzing with him certain protagonists that are normal people, from the stories and movies and series (of any form)that he likes. He'll see quite quickly that the conflicts make them interesting.
But he may say that it is not enough. For that there are a few more literary tools that might help him see why normal people are interesting. The first one is having flaws (internal or external) and the second one is using "The Ghost".
Flawed characters are characters that just like normal people aren't perfect. Those flaws can be internal (self-doubts, for example, or a mild paranoia) or they can be external (they're look frightens ordinary people, for once, or a missing hand for the other). The idea is that the character has to deal with the flaw, and one day to find the strength to overcome it. The fight for the overcoming act makes the character far more interesting. A nice example of that can be seen in The Rain Man, where he learns at the end that he can count on strangers/"dumb" persons like he's brother. Another nice example can be seen in the story of The Ugly Duckling who although looking terrible learned to acknowledge himself and to accept the way he looks, to accept his difference.
"The Ghost" is an event from the past that just like a ghost haunts the character to this day. Again, trying to cope with it is what builds a deep character. One example for this can be seen in the movie Inception, where we literally have a ghost- Cob's wife. Another example for this can be seen in the movie Casablanca, where he has to deal with his broken relationship with Ilsa. This Ghost is far more interesting as the originator of the Ghost actually comes back to his life. In Frozen we see another kind of a Ghost- the act that one feels guilty about. Elsa actually killed her sister.
All of these techniques are there for one reason- to make regular people interesting, to give depth to the characters, to make them human beings with goals and drives and psychology.
Helping him see that his character doesn't fit the world
After he understands that he doesn't have to be a freak in order to be interesting, he will be far more understandable about playing a character that fits the world. Then, try to explain to him as calmly as you can what it is in the way he played his character that doesn’t fit the world.
Explain to him that the characters are in a world where being a freak is bad, where achieving one's goals is the ideal. Each and every one for himself, as the saying goes. Give him examples from the way he played his character and analyze with him, in a one-on-one conversation where his way of acting came from. Use the background he created to illustrate to him where your problem comes from.
Then ask him what problems he has with his character, and together try to find a solution. Maybe let him be just a little bit freakish. Maybe he needs to just create a different character. This is basically between you and him. After that show the updated character to the group and get their approval.
When combining those two, you'll get a player who his far more willing to both play the character while also seeing the problems with the way he played his character before.
Combining the two solutions
When combining the two solutions you get a better player, who understands for the future also how to create regular characters that are not freaks yet far more interesting than those freaks will ever be able to be. Furthermore, you get a player who is willing to play his character as written while still making the character fit into the world. Hope any of these helped you.
Best Answer
You seem to indicate that his fear is so overwhelming, that it is drowning everything else out at the moment. But that is solely your decision. Just as his actions, his emotions are also in your hands. So this situation will end by you deciding to end it.
This does not mean that he will have to stop being afraid. Some would say that bravery is not the lack of fear, but that you keep going in spite of fear. How do you do that? You take out "overwhelming" from "overwhelming fear". Find something that is more important to him than saving his skin. The classic examples being "saving the world" and "protecting my loved ones", but you can invent your own.
You can still display your fear. You will most likely be the one to encourage planning and preparing a lot, being acutely aware of the dangers. If you can go fight something or reserch a ritual to banish it, you will vote to go to the library.
Later on you could even decide that he has overcome his fears, but then it will be character developement and can lead to emotional moments, instead of feeling like "he is finally doing what everyone else is". Imagine the scaredy-cat who has never willingly entered melee and has woken up sweating from nightmares on multiple occasions kneeling down beside the unconscious fighter and taking up the only magical sword that can stop the darkness from outer space, screaming and charging defiantly at it: "You. Will. Leave. Them. ALONE!".