I have a perspective on this, since I took a rather engaging philosophy class from the late Prof Dreyfus at Berkeley.

As the article hints at, his line of argument was a completely valid criticism of AI based on a set of rules written with symbolic logic. He arrived at this conclusion after studying Heidegger's concept of dasein. The best way to describe dasein is through a classic example [1]:

"...the hammer is involved in an act of hammering; that hammering is involved in making something fast; and that making something fast is involved in protecting the human agent against bad weather. Such totalities of involvements are the contexts of everyday equipmental practice. As such, they define equipmental entities, so the hammer is intelligible as what it is only with respect to the shelter and, indeed, all the other items of equipment to which it meaningfully relates in Dasein's everyday practices. "

In Heidegger's mind, meaning is distributed across the web of interrelationships between objects and their various uses and ideas to humans. Intelligence was thus a process of knowing those relationships, and being a part of them. Being-in-the-world (dasein is a German word related to 'being') is a result of us as humans being 'thrown' into the web of meaning, in fact we are born already finding ourselves in it.

Dreyfus' objections to AI stemmed from the idea that computers are thrown into the world differently from us. They are the hammer in the anecdote, and not the human. During the class, we argued a lot with him about whether humans are the only creatures that have 'being-in-the-world'. We asked about the idea of the soul, and why humans are unique in this paradigm. My feeling after the end was that his entire philosophy comes directly from Heidegger. And since Heidegger didn't mention animals, or the lack of souls, his conclusion was "dunno".

Related to this, Dreyfus had an understanding of physics that was quite antiquated and classical. One example was the concept of time. According to Dreyfus, the physicists' notion of time was a series of discrete observations along a timeline, whereas humans experience time in stretches and long segments. I remember telling him that the notion of a single instant of time is poorly defined in quantum physics, and that we do recognize that every event has some time uncertainty. I remember asking him why we couldn't model human experience with some complicated function. For him, everything came back to Heidegger. To him, we physicists were being too reductionist, and there is indeed something about humans that cannot be described using physics. He stopped shy of calling it a soul, but it was essentially that.

[ETA: I now remember talking to him about Conway's game of life, and how a simple set of rules could result in complex, often hard to model behavior. My point was emergent systems exist within physics, and the way we describe them is different from single particles. His reply suggested that he was certain that human experience wasn't just 'emergent' - it was fundamentally different from anything in physics, no matter what.]

The class was on physics vs philosophy, and we disagreed. I don't think he really understood what I was trying to tell him. This was in 2013, before most of the deep learning revolution, but I think he would have the same objections with what we have now. Here are two possible directions we can go from here:

1) Argue with continental philosophers about reductionism and whether humans have a unique essence that cannot be modeled.

2) Understand Heidegger's and Dreyfus' thoughts about being and time, and drive AI research in better directions.

I prefer (2), because I already tried (1) with Dreyfus and it wasn't successful or productive.

I think understanding and modeling the graph of inter-relationships between objects and humans is exactly where we need to improve when it comes to AGI. It's probably going to need a good degree of embodiedness, an idea of a computer being thrown-into-the-world. Dreyfus would tell us that it's fundamentally impossible, and that we should all just give up on it. I think he came to the wrong conclusion. What I get from Heidegger is not "AGI is impossible" but rather "hey, this is what we should be worrying about. This is how humans see the world".

TLDR: Dreyfus had some good ideas about AI. I think it's extremely insightful to pay attention his thoughts. Don't waste time worrying about his arguments against physicalism.

[1] https://plato.stanford.edu/entries/heidegger/