I'm not clear whether the customer what's the RAW images to do his own editing or simply to eliminate their improper distribution.
If the former, then I'd have to ask if he has appropriate software and skills and printing equipment to produce results as good as yours. If the latter, I can fully understand his position. He may be an executive of some well-known company and pictures like these could not only ruin his career, but also the public image of that company.
I'm going to assume he wants the 'full package', including prints, and maybe finished JPGs, but really wants to ensure that the images never get seen by anyone other than himself and his lady friend. I really don't have a problem with that. If you really would like to use a single image for potential advertising, let him choose it, and make sure it's a waist-up shot only...or in a swimsuit. But he may still not want anything of the kind floating around in cyberspace.
As noted earlier, what's there to ensure to him (the customer) that the pictures will never get (wrongfully) distributed, whether by intent or accident? I think he has the right to guarantee that they NEVER go anywhere but home with him. Even sample printouts the size of a contact print. Think of it like government classified material on a computer. All other hard drives must be locked out while processing classified data, and even impact printer ribbons must be securely stored after printing classified data. In the case of a small photography business, what's to prevent your entire computer being stolen, or even your backup harddrive misplaced and falls into the wrong hands?
Part of me says take the pictures, take the money, give him the memory cards and be done with it. Or, let him watch over your shoulder as you process the pictures and print them, make a CD of them, and then delete everything off your computer. Note: a simple 'delete' doesn't erase them, you need a 'secure delete' capability to truly make them gone forever. Alternatively, defrag your hard drive(s) after deleting them.
Lastly, as a former contract computer consultant for most of my lifetime, With rare exception, the contract specifically stated that everything I wrote was 'work made for hire' and was property of the customer. The 'work made for hire' clause is big in legal terms which I don't fully understand. At most, I may have kept a printout of some technical routine fragment, but that's about it. I could really care less about keeping the guts of a city payroll calculation program or inventory system I wrote along the way.
Maybe someday in the future, you'll get a good laugh telling friends or other clients about 'the guy who wanted to keep the RAW files' but didn't have any photo editing software or whatever. For now, get it ALL in writing, do the shoot, give him the files, and keep the money. Use some other pictures for advertising.
