How does memory impairment affect the ability of an elder dementia patient to use verbal language?

Not great. The verbal langauage declines as the dementia progresses. Any new verbal and non-verbal language will not process into the brain for learning purpose and carrying out function. So stick with the simple and familiar verbal langauage for now. There is an interested concept of conservation for dementia individuals called "landmark" or "elderspeak".
Dementia. There are many types of dementia with differing causes. Some cause loss of language early such as a stroke in the speech areas. Others may have gradual decline with difficulty finding and using appropriate words. Speech is complex we need to know what we want to say, remember the concept and find the words. We also need the motor ability to move mouth, tongue, and larynx and expell air.