This is actually in Book XI (not XII). Odysseus cannot hug her, no matter how much he wants to, for his mother is now a "shade," living in Hades. There is a division between flesh and spirit that cannot be connected. Here is the passage:
"So she spoke, and I wondered how I might embrace my dead mother’s ghost. Three times my will urged me to clasp her, and I started towards her, three times she escaped my arms like a shadow or a dream. And the pain seemed deeper in my heart. Then I spoke to her with winged words: “Mother, since I wish it why do you not let me embrace you, so that even in Hades’ House we might clasp our arms around each other and sate ourselves with chill lament? Are you a mere phantom royal Persephone has sent, to make me groan and grieve the more?
My revered mother replied quickly: “Oh, my child, most unfortunate of men, Persephone, Zeus daughter, does not deceive you: this is the way it is with mortals after death. The sinews no longer bind flesh and bone, the fierce heat of the blazing pyre consumes them, and the spirit flees from our white bones, a ghost that flutters and goes like a dream. Hasten to the light, with all speed: remember these things, to speak to your wife of them.”’