One question. If he was told he was getting a less than honorable discharge would he not have had an opportunity to challenge or appeal the decision in some sort of military court of law? It's been 30 some years ago and it was the army and not the navy, but back then if you got into trouble the Army would offer you a less than honorable discharge and you could either accept it or go to a courts martial and challenge it, but also accept the consequences (stockade time, same bad discharge, etc) if you lost.
That is exactly what this pariticalar Secretary of the Navy Instruction deals with:
Review at the Level of the Navy Department of Discharges from the Naval Service