I think you are correct. I went back to my DD 214 and in block 28 it says the reason for separation is retirement. But for a person who is separated as being homosexual what exactly does it say in Block 28? Still, there are a couple of things that puzzle me about this. First, if the soldier wasn't gay then why didn't he challenge the allegation? If he wasn't gay then couldn't he argue he was a victim of slander? And if he is gay, then what difference does it make in the civilian world? I don't think there are too many employers out there that have employment policies that ban gays.
it actually reads "homosexuality"...I don't have a dog in the hunt over whether or not homosexuals should be allowed to serve in the Armed Services; my opinion is that as long as you do your job and don't interfer with the conduct or completion of the mission then I don't care what orientation you are... but the regulation is clear...if you're "caught", you've enlisted under fraudulent circumstances and you're gone...