Saw that as well - he certainly made some really bad mistakes reading the ball. I have seen a few theories. Here is my thought that at least justifies his arm swinging motion (excluding the terrible read which in the ends trumps all and makes it bad coaching on his part)
The runner at first really complicated things. If it was just Mcguire it was easy to tell him to stay half way. But he also had to concern himself with the runner from first, and the only way he scores the winning run is if the third base coach tells him to keep running hard. My gut is that was not signalling to Mcquire but more so to the runner from first.
I suppose its quite possible it did not cost the game for the Sox, because if they had returned there had been two outs with a runner on second. So the Jays still likely win -- but blowing that 30-40% chance to win with idiocy is certainly annoying.
Either ways its a terrible read on the fly, but the odd signals he did made more sense if you think about the runner from first looking at him rather than from second.