Remember: Pre-9-11 the big fear was that mil intelligence would be seen doing intelligence work on citizens, hence The Wall. They may have destroyed the data out of fear of being accused of such a thing, apparently never dreaming that they were getting rid of what could have prevented an attack on our country more deadly than Pearl Harbor.
The Wall had nothing to do with DOD or military intelligence doing surveillance of citizens. The later comes under the Posse Comitatus Law. That's what the DOD lawyers were concerned about - erroneously.
The "Wall" was within the DOJ, period. The intelligence side of DOJ was not allowed to talk to the criminal justice side of DOJ. When the "Wall" memo was written, Gorelick had absolutely no control over what DOD did or did not do.