Let's say that during a conversation lesson your student is continuously saying things such as "he go to work; he get up at 7; she walk to school". After 5 or 10 minutes, you decide to start instant error-correction; the student begins to form the verbs correctly; but then he/she goes back to the same mistakes. So then you decide to spend 10 minutes revising: you draw a substitution table; the student fills it in correctly; you analyse the form; you drill; you concept check. All fine. The next lesson comes. You decide to end with some free conversation - the student says, "He go/ she walk/he get up...". How can I get my student to actually use the language that I know he/she knows?
As you say, they know it-- they just haven't acquired it. Most are reflecting how they form their own language; a few others have just developed bad habits (acquired the grammar inaccurately).

Time and experience is the only cure-- though an occasional graphic lesson may accelerate the process slightly. But don't press it; you cannot will acquisition into being. Let them listen to you or to tapes, etc a lot-- accurate input, and plenty of it, is critical.
What are "a graphic lesson" and "accurate input"? Do you think MFP is compulsory in a language lesson? Is practice more important than MFP?
Students: We have free audio pronunciation exercises.
a graphic lesson = a lesson with graphics: you said 'you draw a substitution table'
accurate input = A/V or teacher's or other native speakers' voices using the correct grammar in context, aka English communication.
MFP -- I give up. What is that? Whatever it is, practice-- in communicative mode-- is better.

M = meaning (does the student truly understand when to use the target language?)
F = form (does the student know the basics of how to form the target language grammatically?)
P = pronunciation (can the student pronounce the target language?)

Basically, is the theory more important than the practice, or the other way around?
Ah! Another acronym. Yes, of course, MFP has to be addressed, and adult students do seem to need to know the theory, where children absolutely do not-- but it can be done, and more efficaciously, in the process of communicating. Slip it in when they aren't looking. It is getting involved in 'free conversation' that most helps your student acquire the language.

Granted, my 'free conversation' is not very free-- I rely on a lot of conversation-stimulating materials (videos, newspaper articles, cartoons, picture books, quizzes, puzzles, lyrics, gossip, etc) to ensure that the student is getting vocabulary and items of interest beyond the state of the weather and the student's weekend activities. Input, input, input-- if the student is getting enough of it, at a reasonably comprehensible level-- s/he will eventually be able to speak English well.

Of course, students vary. Most of my Japanese students can parse circles around me but cannot pronounce their way out of a paper bag. Yours may have other idiosyncrasies.

Are we talking about the same points?
Teachers: We supply a list of EFL job vacancies
Actually I'm a new teacher and at the moment I'm just feeling my way around. I have one student who is very intelligent, knows (the theory of) how to form different tenses, knows a good range of vocab, but doesn't seem to be able to express himself orally. I know that it can't be easy, but on the other hand, if you know it then surely you should be able to speak it. Obviously there's a lot more to it than that; but I just want my student to be able to say what he wants to say and what I know he can say. I know he can listen; I know he can write. Why can't my student speak?
Because it just doesn't work that way-- one cannot try to apply all the rules of grammar and syntax, and speak the language at the same time, without either ( 1 ) making some mistakes or ( 2 ) taking forever.

For a good introduction to modern language teaching theory and its ramifications in the classroom, find a copy of the book I have been paraphrasing: [url=http://www.abebooks.com/servlet/SearchResults?an=Krashen&sts=t&tn=Principles+and+Practice+in+Seco... ]Principles and Practice in Second Language Acquisition[/url], by Stephen D Krashen (Pergamon Press) ISBN 0080286283.

that's a problem of some students I have...If I teach a 3 hrs lesson, I give them about 2-3 conversation topics...let them speak without correcting their mistakes, they should learn to loose their shyness or worries that they may pronounce words the wrong way... once they start to be more comfortable you can choose more difficult topics etc. Also is good if students talk to each other, not just with the teacher. I always tell them that if they speak with a native speaker, he/she won't correct their mistakes.
Students: Are you brave enough to let our tutors analyse your pronunciation?