The article says that he could have copyrighted the work if he disclaimed the AI generated source images in his application. The collage he created is copyrightable but he can't claim copyright on the source images because they were not created by a human. If someone were to take his collage, he'd still be protected.
What's significant about this is that this means that you can't simply copyright an image you had ai generate from a prompt, there needs to be some kind of transformation, and if someone else got ahold of the original AI image before transformation they could use it freely as public domain.
He's allowed to copyright it as a collage, just not claim ownership to the source images.
When you say a painting from a sketch, what do you mean? Is it a sketch from another artist? If so, you can still copyright the painting, you just can't claim ownership of the sketch, because you didn't make it.