Hi Patrick. I realize we can explain much in the way of life's chemistry. But what I meant when I referred to life as an "obstacle" to physicalism is that we cannot explain the quality
of its organization. By "explain" I mean demonstrate the truth of assertions about biological causes of life; it is not enough just to offer a theory in place of an essential "something" needed to complete a physicalistic life model.
I have argued the "organization quality" point many times here a PF, so I will make this as brief as possible. Let me try an analogy. Say you and a friend are aliens who accidentally stepped in a bubbling quantum fluctuation and were instantly transported to Earth. The two of you find no humans around, but you do find a car in perfect working condition and decide to see if you can explain what caused it. You take it apart, study all the relationships between the parts, come to understand combustion, the concept of a transmission, suspension, the electrical system, etc. Finally you declare to your friend that since you can explain how all the parts work to create a working car, you fully, 100% understand what causes a car. Your friend is skeptical. He wants to know how all those parts got organized that way. After pondering that question your answer is that since all the relationships between the parts are physical/mechanical, then it must be that physical/mechanical forces brought all that stuff together. Your friend says okay then let's put all the parts in a pile and see if they come together, and of course they never do.
Similarly, as deductionists we start with an intact system of life, and as reductionists we study it intrasystemically (I'm leaving out evolution for the moment since I am just pointing to systems). With chemistry you can get a little further than the auto theorists if you put life's constituent chemicals in a vat, but not much further before chemistry turns repetitive. What is missing is what I call "progressive" organization where we can observe chemistry kicking into the sort of organizational gear that will lead to essentially perpetual system building. The very furthest we've gotten is the Miller-Urey experiment, which only demonstrates my point: self organization only can be shown to occur for a few steps before turning repetitive (even PCR, impressive as it is, is merely repetitive, plus it starts out with materials already established by biology's organizational quality).
Some say, "evolution has taken billions of years to create life." Actually it took billions of years for evolution to shape
life. Life itself apparently came into existence fairly quickly. But I am not even insisting we need to observe life created from chemistry; I would consider an abiogenesis theory reasonable if progressive self-organization could be shown to be possible in any circumstances (i.e., whether it leads to life or not). So long as it can't, I will continue to see life as a problem to any purely physicalistic model.