According to Mike Portnoy and John Petrucci, he was released because of several reasons, but most importantly because he didn’t fit in with the band in a few important ways. He was far older than the rest of them, had a different idea of what DT should be, and lacked ability as a frontman when performing live. There were also apparently a few personality conflicts at work.
Dream Theater is still in contact with Charlie, he sang at Mike Portnoy’s wedding in 1994 and appeared at the 15th anniversary celebrations of When Dream and Day Unite (available as When Dream And Day Re-Unite through Ytsejam Records).