We can start with the PTS dictionary. Paṇḍaka "a eunuch, weakling". This definition is repeated in Monier-Williams sv paṇḍa. As far as the early Buddhist texts, they are clearly not to be ordained, but I cannot see it said anywhere what the word means.
There are two places in the traditional commentaries which have explanations. The first is on the Mahānidessa and from the 6th or 9th century CE:.
Paṇḍakāti lokāmisa-nissitakathā-bahulā ussanna-kilesā avūpasanta-pariḷāhā na puṃsakā. Tesaṃ sabbesampi upasaṅkamane ādīnavo vutta-nayen'eva veditabbo. (Saddhammappajjotikāya 2.541)
A rough translation might be
Paṇḍakas are great adherents to the pleasures of the world, rife with defilement, burning with desire, and without gender (napuṃsaka). It should be understood as just a way of saying that all of them are evil (ādīnavo).
Of interest here is the word napuṃsaka, PED "of no sex". Fortunately Margaret Cone's Dictionary of Pāli has reached "n" and she defines as "one is neither male nor female; sexless; a eunuch"; and notes masculine and neuter grammatical forms." Kaccāyana, the great Pāli grammarian, uses napuṃsaka and napuṃsakaliṅga as terms for the grammatical neuter gender or words of that gender.
The word originally comes from a Vedic noun puṃs meaning "man". "Na" means "not". In Pāḷi the semantic field of puṃs has been taken over by purisa (except once in the compound itthi-pumā "women and men"). The word pudgala is sometimes written puṃgala, in Buddhist Hybrid Sanskrit (suggesting a relationship). So we can take the -ka either as a diminutive ("not even a man") or as an adjectival suffix "one who is not a man" [and by implication not female either].
The other commentarial passage comes from Buddhaghosa's Vinaya commentary.
Paṇḍakāti ussannakilesā avūpasantapariḷāhā napuṃsakā; te pariḷāhavegābhibhūtā yena kenaci saddhiṃ mittabhāvaṃ patthenti. (VinA 5.991)
Leaving out the repetition this quote adds:
They overcome with force of their burning [sexual] desire, anyone whom they desire to become friends (mitta) together with.
The latter simply suggests prejudice to me. There is a discussion on Dhammawheel about this term. It cites a Theravāda Bhikkhu (I have not traced the source) however the list is from the Vinaya commentary (VinA 5.1016). What follows looks to be a fair translation (ascribed to Thanissaro):
Regarding paṇḍakas, in the Vinaya Atthakathā these are classified as being of five types:
1) āsitta-paṇḍaka: — (literally, a "sprinkled one") a man who finds sexual fulfillment in performing fellatio on another man and bringing him to climax. (For some reason, other homosexual acts, even though they were known in ancient India, are not included under this type nor under any of the types in this list.)
2) usūya-paṇḍaka: — a voyeur a man who finds sexual fulfillment in watching other people have sex.
3) opakkamika-paṇḍaka: — A eunuch - one who has been castrated.
4) pakkha-paṇḍaka: — A half-time paṇḍaka - one who is a paṇḍaka only during the waning moon.
5) napuṃsaka-paṇḍaka: — A neuter - a person born without sexual organs.
Of these five kinds, the first two may ordain as bhikkhus, the other three may not.
Further discussion follows, though it is far from conclusive. No.4 sounds mythical. This tends to confirm the Saṅgha traditionally had an open attitude to sexual orientation, though of course once ordained monks are expected to give up all sexual activity. I found no evidence to suggest that Paṇḍakas are not capable of enlightenment in older traditional texts.
As a modern practising Buddhist I see no reason that any person should not become enlightened regardless of ethnicity, gender, sexual orientation or any of the other traditional pivot points of bigotry, provided that they apply themselves. The last thing we need in Buddhism is irrational prejudice.
And yes, everyone should learn Pāḷi.