IMO he was rusty. He missed shots he normally would hit, BUT.
The fact is he is one of the most athletically challenged basketball players in the NBA. He can't move his feet worth a dam, he is a poor leaper, plus he's extremely slow off the floor, if and when he does try to leap.
He looks lost on defense most of the time, because he knows he will never get to where he needs to be in time to help defend. So he over-compensates by pushing, grabbing and fouling.
Will he improve is the question? When your limited as he is, the only thing that will help is minutes and more minutes, to learn how to "memorize" how to react to the game defensivly. On the O side of the ball he is best with the ball in his hands, to pass, or shoot, and pick and roll, as most guards do.
If an NBA team can afford the luxury of a 7' player that plays like a small, then yes he could end up 8th or 9th player off the bench when you need a some scoring. But that is certainly a luxury.
Someone mentioned Jermaine O'Neil, when O'Neil was a second year player he was an obvious talent, he could defend, block shots, yes he needed seasoning, and experience for him to develop into the player he later became. But he was always quick and athletic.
Kelly isn't a bust, he's just not starter material.