The Reptile Room: Part One - S1-E3
Trivia: Count Olaf dismisses the movie theater, referring to it as a "god forsaken nickelodeon" and stating repeatedly that it's more convenient to watch entertainment from "the comfort of your own home." (Even once quickly glancing directly into the camera with a smirk as he says this.) This is a bit of a swipe at the prior 2004 film adaptation, which was released theatrically and distributed by Nickelodeon Films, as well as a clear reference to this series being released via Netflix for home viewing.
Answer: He's some sort of robot or cyborg, and he's shorted out from the damage he received in the brawl.
Brian Katcher