We had this exact problem with my boyfriends son (I've been with his dad since he was 18 months and his dad is the sole carer so I've had a hand in raising him thus far). Like your son he would sit on the toilet but refuse to wee, then wee as soon as he was off. He didn't mind weeing in nappies, pants, on the floor...anywhere but the toilet. He was still in nappies until well after his third birthday, we had no choice because no matter how often we took him to the loo throughout the day he just would not use it. We got him pull ups and explained to him about saying when he needed a wee but all to no avail, aswell as taking him to the loo many times to see if he needed a wee, we would take him to sit on the loo after he had done a wee or a poo as we felt it was pure laziness and he had to realise that he couldn't escape actually sitting on the loo.
Like you I was very concerned about him going to nursery but by the time September came round he had started using the loo properly. He has ad too accidents at nursery wich I found embarrassing but it wasn't any big deal for the staff. He's now four and a half and has been accident free for many many months. I'm sorry this is not contructive advice but I just wanted to let you know it's not uncommon. I think children just develop different skills at different times, how ever much it may feel like it at the moment your son will not be in nappies forever. Try and relax so as not to make him anxious about going to the toilet and continue doing as you were doing he will catch on, or, as in my boyfriend's son's case, realise that it's more bother for him to take the l'azy' option (nappies) than it is for him just to use the loo.
Good luck!