I don't think Lewis was by any means a natural storyteller, and all of his fiction suffers to one degree or another from his shortcomings in this regard. Every time he sat down to write a story he was moving outside the sphere of his strongest writerly gifts....
But in the basics of the kind of storytelling he liked best — creating vivid characters and keeping a lively plot moving along — Lewis struggled, and I think at times he knew it. Note how in That Hideous Strength he has to pause to tell us what we are supposed to believe about his two protagonists: “Jane was not perhaps a very original thinker”; “It must be remembered that in Mark’s mind hardly one rag of noble thought, either Christian or Pagan, had a secure lodging.” Apparently we might not have figured out those points without explicit direction.
The problem with this is that nobody is a natural storyteller, except in the sense that all human beings are, and while it is certainly true that Lewis struggled with the kind of storytelling he liked best, this is true of any competent storyteller. In reality the only test of competence in storytelling is whether fair-minded people with a taste for story like the stories. That's the whole point of storytelling, and it can be judged by no other standard. It certainly can't be determined on the basis of things that Alan Jacobs vaguely suspects and can't coherently defend.
The argument about That Hideous Strength shows some of the problems. All storytelling is telling, by definition; and no storytelling is showing. 'Showing' when talking about stories is just a figure of speech for successfully interesting telling, and the success, again, is how it is taken by fair-minded people who like stories. The whole 'Show, don't tell' advice, of which this is just an unoriginal variant, boils down to the claim that you should not tell a story, but tell it well. Likewise, the sarcasm of the sentence starting with 'Apparently' runs aground on the fact that what the comments say about each character are essential to their character arcs. Whether the comments are successful in contributing to the story in this way has to be determined by whether they clarify or impede the typical reading experience of the good reader; that they are there, however, is not itself a flaw. Jacobs has fallen into the well known critic-trap of not recognizing that good criticism requires grasping the common taste of good readers as a standard and enriching its application, not imposing his personal taste as if it were the standard.
I'm not even going to get all the way into the fact that Jacobs does not get Menippean satires, taking as he does Frye's very abstract characterization for the purpose of contrasting with novels and Bakhtin's interaction with it as part of his philosophy of dialogue as if they were proper characterization of the genre itself. Of all of C. S. Lewis's novels, the only one that has clear concrete similarities to a Menippean satire is That Hideous Strength, and this is obviously because it has Menippean satires among its major literary influences. It also should not have to be said, but apparently has to be said, that Menippean satire is a form of storytelling.
Again, none of this is about the comparative strengths of Lewis, which have to be assessed from the taste of readers generally. It's obvious from the enduring character of his fiction that he's a better storyteller than a random person off the street, or, for that matter, some of our bestselling authors. And it's obviously a fool's game to demand perfection, since no one, not even Austen, Dickens, and Eliot, have ever achieved it. So the only question is whether there are features of Lewis's works that, when compared to the authors of the highest excellence, can be seen to be less than they could be. And it's really not informative to discover that someone is not as nearly perfect an author as someone like Jane Austen, nor does any such thing reflect on competence, natural storytelling ability, nor is whether an author struggles with something relevant to it. As I mentioned previously in talking about Alfred Austin's poor reputation -- which has come about largely because the critics have not been fair-minded but deliberately out to sabotage a definitely-not-Tennyson-league Poet Laureate who got the title at a controversial time by having the right politics -- to treat anything short of the highest excellence as a defect, in any craft, is a serious flaw in judgment that in reality shows a contempt for the craft itself, whose natural expression cannot be genius but only effective competence. Is Lewis an effectively competent storyteller? The only evidence that matters, that of people who love to read constantly reading his books, shows that he is, and, indeed, is not in the bottom tiers, either. After that we can talk about his defects relative to the summit of the art; but none of this has anything to do with anything Jacobs is talking about.
Jacobs has responded. I note some of the ways in which his response merely confirms the problem here. It should be noted, for those who don't click over, that Jacobs's scurrilous 'bet', by which he is clearly trying to poison the well without any evidence, that I had never heard of Menippean satire before his post is a bet he would lose; I have read quite extensively in the genre. This contrasts with Jacobs, who shows in his arguments every sign of having only a second-hand acquaintance with the genre, through Bakhtin and Frye, given that (1) he never compares Lewis to any actual Menippean satire, nor even mentions any of them; (2) his claims about Menippean satire depend crucially on abstract frameworks given by Bakhtin and Frye rather than evidential claims about the actual works in classical and Late Roman works of Menippean satire; and (3) his account of Menippean satire is so vague and broad as to make it not so much a genre as a literary technique found in radically different works.