There's another awesome clip of him talking about Lynch's oddness from the TV Series DVD set. Anderson is trying to decipher what one of the dream sequences is all about and he tells Lynch what he thinks between takes. Awesome Lynch impression: 'No! That's completely wrong! And ... action!' *boggle*. I guess it's how he tells the story :(
I talked to someone years ago who was in the same dorm floorwith Lynch for a year at Mass Art. Apparently he had trouble fitting in because he kept to himself and mostly shunned drugs.