That and he got ridiculously unlucky. K/9 over 11, BB/9 over 4, but really high HR/FB% (25%) and very low LOB (52.5%) resulting in a 8.44 ERA, 5.91 FIP despite a 3.90 xFIP. He's regressed heavily since then.
The positional adjustment for being a DH is what makes the defense negative. In Colabello's case, he's such a horrible defender that he would likely be more valuable playing as the DH. He's a really really really bad defender.