Alzheimer's but sharp and not easily distracted—Has anyone else encountered this?

Teepa Snow describes this behaviour well. Calls it 'amber'. Like being caught in amber, stuck in the moment, in a loop. They get stuck & can't change track.
Medication can work well for some & is worth checking out.

Extreme OCD type behavior is not rare with the dementias....in fact, it's common for an elder to get SO obsessed and focused on a subject that they're stuck in a loop and can't stop talking/thinking about the matter at all, no matter what you do. Speak to your grandfather's doctor or neurologist about medication to address this issue so he can get unstuck and relax a bit.

So many folks with AD were brilliant professionals before AD took over, that's a common thread too. When I worked in a Memory Care Assisted Living residence, it was filled with former doctors, high powered lawyers, engineers, professors, etc. Nobody's immune from the dementias, unfortunately.

I hope you can get your grandfather some help with the anxiety that's keeping him up at night. AD can create such difficulties for all involved, I know, which is why I hate the dementias with all my heart. I watched my mother battle for years with it before she passed in February. Best of luck

My mom would get very wound up when she got upset and actually seemed to be more cognizant than was normal. I sometimes thought it was adrenaline that temporarily caused the blood vessels in the brain to open up and flush out some of those tangles.

Seroquel worked wonders for my mom. These times when she would just get stuck on something were usually with her sundowning.