Catalyzes the conversion of 7,8-dihydroneopterin (H2Neo) to 6-hydroxymethyl-7,8-dihydropterin (6-HMD). 7,8-dihydroneopterin = 6-hydroxymethyl-7,8-dihydropterin + glycolaldehyde Homotetramer. Belongs to the archaeal dihydroneopterin aldolase family.