Plot twist makes no sense

"Don't say "they see what they want to see". That just means some things look different, e.g. he doesn't see his bullet wound."

No, the movie actually implies much more than that. Ghosts have been walking around for centuries and apparently they don't see the world changing around them and confuse living people like Cole for someone else from their own past lives. They adjust everything to their own reality.

As shown in the movie, ghosts seem to be stuck in certain parts of their lives, like their deaths or a trauma or some other important event. Malcolm was obsessed with his work and the guilt he felt over Vincent. His mind was completely focused on that and in that context it made sense that everybody stopped talking to him. And being a ghost seems like being in a dream state where you don't realize things don't make sense. Even though he got around without any interaction with other people, he must've just assumed he did.

His wife did notice Malcolm moving things around, that's why she put the cabinet against the basement door. But they don't do it ALL the time, it's little eerie things like a pendant being misplaced or a glass window suddenly breaking.

I always got the impression Malcolm's logical mind wouldn't allow him to accept the logic of the situation. I wonder if the implication was that the ghost manifests at certain times but has no memory of the times between. So he literally has no idea what is happening to him when he's not manifesting.
Cole realized he was dead but was afraid to tell him.

He probably just feels like the time in between was all very status quo, and so it doesn't stick out in his mind as anything special, and so he doesn't give it a lot of thought

I think you are looking at his life literally. 24 hours a, 7 days a week. He has to be somewhere, doing something every moment, either sitting in his office, watching TV, driving in a car, eating breakfast or lunch, showering, seeing his wife, seeing his friends, seeing his mom and dad, seeing his co-workers, getting gas in his car, shopping at the grocery or sleeping. That is how life is for a mortal.

The lives of ghosts are shown to be much more murky, they just kind of come and go, pop in and pop out, kind of hazy and dreamlike. It says in the film, ghosts don't know they are dead, they see what they want to see.

I understand your logic, as if Willis's character is conscience and alert every moment of every day and he should notice that he only talks to the kid and no one else, what does he do all the time when not with the kid.....he should notice something is different but like I say, apparently ghosts aren't visible and interacting with the physical world 24/7, they just kind of come and go in their odd ghost patterns and pop in and out of conscience contact with the living world. They don't seem to be aware of the gaps in between appearances.