This guy wouldn't have started selling your thing is it wasn't clear that it's something that people will pay for. Your first reaction when you hear that he's making money off of it shouldn't be how to stop him. It should be "Wow. I could be making money off of this.
My advice:
- Don't worry about this guy.
- Put a price on your product
- Stop giving away the source
- Improve it until your "competitor" fades away
There's no rule saying that you have to give your work away as open source. And as you've demonstrated, there's also no rule that if you give your work away for free, somebody else won't notice its value and sell it in your place.