I think it was described as a bit more than "no talent." In the flashbacks, I remember much angst (because I was weeping--Lee is my favorite ^^) about him not being able to do it at all, not just that he was bad at it. And they weren't going to let him graduate from the academy because of that, but then Gai convinced them. Or I could be making that part up.

I think "lacks the ability to mold chakra" is how it's described; but then of course, there's the issue of what exactly "mold" means. *shrug*