I think theres no doubt if you are explaining something or instructing then less attention is placed elsewhere.
I think you get better at making flying a motor skill so that the ability to talk and fly at the same time gets easier but you will still miss the odd radio call. But then again while instructing you are probably paying more attention than the average shiney PPL holder.
Your mans reaction was probably as a result of the shock from his engine dumping oil and he was imagining what it would have been like if it had decided to do it 20 minutes later. If the oil was new had it just come out of engineering I wonder?