Is my puppy retarded?

All puppies twitch in their sleep -it is part of their REM sleep. He is still very much a baby. He will sleep a lot and not be able to do much by the way of potty training yet. I don't think I would try hard (other than taking him out frequently) for a few weeks yet. Just cuddle him a lot, let him sleep, be sure he is fed often and wait for him to grow up a little. You will need a vet visit very soon for first shots and to be sure he is wormed. If you really don't think he is eating enough, wet down his dog food with puppy milk replacer or try hand feeling scrambled eggs or boneless chooked chicken. You might be amazed at how much progress he makes in a couple of weeks. Two months from now, you will complaining how rowdy he is and how he play bites everything. Hang in there.