If there is anything to this, it is probably a "resignation for the good of the service." That would leave him with an "honorable conditions" discharge but would be almost the same as an "other than honorable discharge" for an enlisted man.
But with the 'resignation for the good of the service', would Kerry still retain his medals? Because the record seems to say that he didn't, but that they were returned/reinstated when Carter fixed things for Kerry in '78.