Ken,
This may be the point at which you want to stop asking questions and let the matter rest. I say that in your interest, as you appear to want to find something that is not there. You may not like what you hear.
From the preliminary report, there appears to be nothing more here than loss of control by the pilot. The pilot missed the ILS course, flew through it and back, and was finally told to execute a missed approach by the controller.
The pilot failed to follow the controllers instructions. He missed his assigned heading. He then flew back to the final approach course where he created a traffic conflict, and was given emergency turn instructions to get him out of the problem he just created. He failed to maintain the assigned altitude, and ultimately crashed.
I understand that you're going to want to see an error that was beyond the control of your uncle, and something that shows he did everything right but fought impossible odds. That certainly doesn't appear to be the case. Short story; he screwed up, killing himself and his passengers.
You indicated that you thought perhaps he had lost his instruments and radio. The odds of that happening all at once are astronomical. It's also extremely unlikely, as the controller provided information to him prior to vectors to the final approach course, to which he responded; his radio was working. Had he experienced instrument failures at that point, he would certainly have made an indication of that loss to the controller. He continued off course with some very large deviations from the course centerline, and failed to execute a missed approach.
Ultimately, ATC ordered him to execute the missed approach, and assigned a heading to turn to. His radio was still working, he was still acknowledging the calls, and still accepted the clearance without any acknowledgement of a problem. Clearly his flying was a big problem at this point; it was very erratic and inaccurate. There is no indication of an instrument problem, or a radio problem. That said, there could certainly have been such a problem, but the pilot gave no evidence of being aware of the problem...a failing on the part of the pilot either way.
Failure to maintain altitude, regardless of any navigational capability, is another matter. The pilot may or may not have been disoriented by the "hard turn" to avoid traffic, but his flying was erratic enough to begin with that one cannot necessarily try to blame his final failure on the controller. He missed every altitude, heading, and assignment he'd been given on the approach phase of the flight.
Your second scenario is also highly improbable, nigh impossible. it involves a passenger flying the proceedure. That the pilot continued to respond to ATC and accept clearances, headings, and assignments, suggests that this is certainly not the case. Why would a passenger with "some flying experience" know enough to talk to ATC, but be foolish enough to not say something about an incapacitated pilot? Didn't happen.
When the pilot went missed approach, he wsa given a heading to fly. he failed to make that heading, and instead continued his turn. His turn, going where he was not supposed to be, put him in conflict with another airplane that was flying the approach he had just been pulled from. To avoid a collision, ATC told him to turn left. He was told to turn left until he was headed west. Instead he flew northeast, and the hard left turn was ATC trying to keep him out of a collision because he was going in the opposite direction of his assigned heading.
During each of these events, he was communicating; he is radio was working. He never reported any failure of any kind, but instead continued to respond to and accept clearances, communicate altitudes, and press the approach...something no pilot would do with failed equipment, certainly without identifying the nature of the problem. No request for priority was made, no request for assistance, no identification of any incapacitation in any way. Even noting that the pilot was off course by a very large degree, he continued to press the approach when he should already have executed a missed approach.
Why your uncle continued to do these things is unknown. Speculation at this point as to the whys is inappopriate; those things may never be known. Apparent by the information presented here is only a case of pilot error, pure and simple. Several errors are in evidence, most glaringly that of continuing the approach when it was going so badly...something that occured long before the missed heading and the hard turn to avoid a traffic conflict that the pilot created on his own.
There may be extenuating unknown circumstances. A janitrol heater, known for frequent failures in light twins, that filled the cabin with carbon monoxide. Or any infinite number of other possibilities. but that's all guesswork involving unknown quantities. Tox screening will identify an excess of carbon monoxide in each victim at a uniform rate...that will give a sure indication. But anything less, especially lacking any evidence or even material suggestion to that fact, should be counted purely as wild speculation. What is provided in the incomplete, preliminary report, is detailing of a pilot who made a series of basic navigational and aircraft control errors, and finally impacted a structure while maneuvering at an altititude where he shouldn't have been, in a location he shouldn't have been, on a heading he was never assigned, following maneuvering to avoid a traffic conflict he created.
It's important to understand that nobody is immune from spatial disorientation. No matter how much instrument experience one has, one is never immune. Those who have been flying highly sophisticated aircraft are probably even more susceptible, and don't realize it, as they're so used to flying using automatic aircraft control systems; corporations and airlines all but insist on it most of the time. For one coming from that kind of equipment to something as basic as a navajo, the possibility of running into trouble may be surprisingly unexpected, and real.
Contrary to what many believe, the risk every time we fly is the same. Either we will make it, or we will not. A 50% chance. Statistical gurus with all their gobbledegook will try to muddy the water, but the truth is that no matter how much experience one has, no matter what kind of training one has, no matter how many times one has flown or done something in the past, the same possibilities exist on every flight. Either you will survive, or you will not.
We do all we can to ensure that the flight ends well. We plan. We calculate. We use checklists, follow proceedures. But underneath it all, we are human beings. We experience the same inflight illousions, the same lying sensations that our inner ears whisper to us. We are tempted to continue when we should not, we are too proud to tell the unseen voice on the radio that we have a problem or are not performing up to standards. We sometimes fly when we have a cold, when we should not, or using medication when we should not. We accept small mechanical problems, telling ourselves that it's minor, that we know best. We push below minimums just that little bit. We do things that are human and hope that our calculations, checklists, planning, and proceedures will keep us from ourselves. It works, most of the time. Not always.
Am I going to tell you on thanksgiving that your uncle screwed up and killed himself and five people? Yes. I am. Does this change the nature of who your uncle was, or mean that he was a bad pilot or human being? No. What it means is that there before the grace go we all; we are all susceptible to the same thing;we spend our careers and flying lives making every effort to ensure that it doesn't happen. I'm sorry it did.
Most of us look on each accident, each fatality, each loss, as a building block to our own understanding. Somewhere, someone is grieving for each of those blocks; what is a learning experience to most of us is a real, tragic loss to someone. To you. And to those you love. And I'm sorry that it's so. The best that can be said, and it's no comfort to you or to your family, is that publishing your uncle's loss may save another's life by providing a testament and a lesson to the critical nature of instrument flying. In his final time among us, your uncle may leave a legacy that means others will not suffer the same fate; of that fact you may take some consolation.
Good luck in your continuing quest to explore the details of this event as they emerge. They may or may not be what you hope to hear, and some of it you may never know. Knowing it won't change what has happened, and knowing it won't make it easier or go away, and it won't bring back your uncle or his passengers. I hope it does help you bring some closure to the event, and to move on.