Black actually can castle, but if he does castle he will lose the knight and the game (due to material loss).
Black and White have equal material.
- The black knight is protected by two pieces: the king and the queen.
- The black knight is attacked by two pieces: the queen and rook.
If the king castles, the knight will be protected only by the queen, and White will be able to win the knight which will lead to a big material advantage: a knight, which is worth about 3 points.
"Castle by hand" (meaning moving the king and the rook over several turns until they reach a castle position) will allow Black to keep protecting the knight. (E.g. By moving the king to F7 to protect the knight, followed by a rook to E8, etc.)