OK, I'm not familiar with Oscars, but here's what I think:
Of course he could be sick, but my first impression is that the poor little dude is very stressed and doesn't feel safe in his tank, hence the pale colors. From what I've heard it's not unusual for O's to pout until they get used to their new environment. Perhaps he's simply too afraid to eat, especially when you're watching him.
Before he gets used to you, I'd say he must first of all get used to his tank. So I'd put the driftwood and/or plants back in and let him hide where he wants and leave him alone a bit. When he's feeling a little bit safer, his colors should come out better, too. Perhaps you can then try to put in a bit of sinking food where he sits and get out of sight. Sometimes they won't eat when they are being watched.
Your water quality seems to be ok for me, so I'd do the necessary water changes and that's it. If you can see any further signs of illnes like red sores, frayed fins or white fuzzy stuff, you should specify that for us to get a better idea what else it could be.
I know this is not much of help, but perhaps the Oscar owners here have better ideas.
Good luck so far!
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Gisela
moppel@gismo.owl.de