Based on my own experience and memories from the 1980s when you could be discharged for being gay, and when those discharges tended to be honorable or general, that could be downgraded to bad conduct or dishonorable if a commander deemed that the person being discharged had lied or otherwise obstructed the discharge investigation or process. There are any number of ways to accomplish that under the Uniform Code of Military Justice.

Generally, that would mean that the person being discharged was at the mercy of the personal prejudices or bigotries of their commander.

Such is the way of things in a witch hunt, which is exactly what Hegseth is ordering.

(For civilians who might not quite understand, the consequences of a bad conduct discharge or a dishonorable discharge are severe in terms of both future military benefits and future employment in the civilian world. Both discharges are disastrous, and a dishonorable discharge is the functional equivalent of a felony conviction, making employment in a corporate position all but impossible.)