1. he asked permission to kiss me

Don't blame the guy for this, blame 40 years of feminist-fueled rape hysteria. I made this silly mistake too back when I was taking those damn blue ones.

2. the kiss was super sloppy and all over the place. not hot.

First kisses usually are sloppy, even when the people in question are skilled spit swappers. It takes time for a couple to develop a tight kissing dynamic. With that said, if you still find this to be a big issue, then he is probably not a good match.

3. when he talks about his ex, he sounds very whiny and almost victimized by their relationship

Despite our image as hardened brutes, we guys have a fragile emotional core.  When women tamper with that core, we tend to do irrational things, from incessant whining (your guy) to pure evil (George Sodini). His ex probably did a real number on him. Try talking to him about it and provide encouragement/comfort when needed. When you feel that he is in a stable mood, have a polite discussion about your feelings for him. Whatever you do, however, do not shit all over him if you decide to reject him. One more bad female experience could cause him to trade in his dour attitude for a loaded gun. I'm only 23 and have been essentially turned off from women for life due to a surplus of such experiences. Trust me, it is not a fun place to be in. Do not lead your guy down that path! 

1. Am I being too harsh and I should give him a chance?

Harsh? Not at all. There is no shame in finding someone unattractive.  

As for your second question, giving a guy that you find unattractive a "chance" is like giving a blind person a "chance" at tightrope walking.

2. Can sexual attraction ever build or is the relationship doomed because there was no initial spark on my side?

I don't buy this "building sexual attraction" nonsense. Sexual attraction, unlike love or respect, should hit you immediately (and hard). While you clearly respect this guy, you hardly seem to lust after him. Instead of stringing him along with the hope of future sexual attraction, be honest with him and let him leave with his dignity. By encouraging him to stay with you in romantic limbo, you lessen his chances of meeting a girl who is crazy for him right off the bat. Plus, it's just plain rude. 

3. How can I get him to be more assertive?

This isn't your responsibility. If you have to mold a potential mate into your image of acceptability, then you are doomed from the start.  Attraction cannot be forced and the human personality is stiffer than a 13 year old boy with a box of Playboys.  What your guy needs is a strong male role model to teach him the ways of the dude. Sadly, such men have become a dying breed. 

"I would love for the nice guy to win this one, but the situation seems rather bleak as is."

Believe me, if a woman had the courtesy to politely turn me down instead of stringing me along or ignoring me, I would sure feel like a winner. That act alone would indicate that she considers me a person worthy of respect. It's not a matter of "nice guy"/"bad guy"; what we have here is two people who simply aren't compatible with each other.

Hope this helps.