I am a person of few words, so let me lay out the story in a simple fashion.

2 nights ago, my wife was working late (8pm) and me and her nephew (21 yrs old) were getting some things done at another place 10 miles away. So when it comes time to go home, he offers to pick up my wife and bring her home, have dinner and a movie together in my movie room. In essence he advises me to go home and be with the kids while he picks up my wife and gets home.

But I felt like picking up my wife myself so I countered, advising him instead to go home and enjoy the Nintendo Wii with the kids.

His reaction was to refuse and said he would rather drive back to his parents home, some 30 miles away.

I could not fathom why he reacted in this fashion, and he essentially drove back to his parents home. No dinner, no movie that night.

Any ideas WTF happened here?

You don't give any information about relationships here (nephew and wife are good friends? You and nephew are good friends? This person is over often?) but my first instinct was that he wanted to talk to her about something personal -- perhaps a girlfriend or a potential girlfriend, perhaps a related family member (he's her nephew, right, not yours? So one of his parents is her sibling). Something that he felt comfortable talking to her about, not you. But without knowing the type of relationship they have, it's really hard to surmise.

My first thought was *not* that he wanted to get your wife alone for nefarious reasons.