Technology in Language Arts Instruction

My second graders have been working very hard to use the computer to word process short stories they have written. We have spent hours on keyboarding skills and practice. Still, this assignment is taking FOREVER. Little hands do not easily reach all of the keys. They constantly need reminders about spacing, forming upper case letters, and punctuation. Still, we are making slow progress.
The children are much more interested in their writing and in editing when they do it on the computer. They LOVE spell check (well, who doesn't?), although they do not often stop to think or have enough base knowledge to choose the correct option that is offered. They click on the first suggestion. I try to remind them that you still have to stop and think!
I have one child who has handwriting that is impossible to read. He loves the idea of using the computer, and I do allow this, although his fine motor skills are so poor that keyboarding is difficult for him. There are two schools of thought: 1. allow him to do all of his work on the computer (this requires constant teacher support) or 2. have him do some assignments on the computer and some by hand. This is the strategy I am using.