Allardyce was encouraged by Nakata's performance against West Brom, which prompted him to suggest Wanderers might look at converting his season-long loan from Fiorentina into a permanent deal in the January transfer window. But he has failed to impress in recent games.
"I thought he was progressing and improving very nicely," the manager added. "But he seems to have hit a brick wall in terms of his development and, at this moment in time, he isn't hitting the heights, especially in terms of his ability in possession, which is the main reason he is here.
"The things he should be giving to the team - what we expect and what he expects - have been missing."
Meanwhile, Sam Allardyce is ready to sign Marseille defender Aboulaye Meite - if he pulls out of the African Nations Cup.
Allardyce is prepared to meet Marseille's £1.8 million asking price for Ivory Coast international Meite, but only if he's available next month.