It's not what you think.
Tov B. Brog at New Conservative Voices has word that former Navy Secretary Bill Middendorf ('74-'78) is about to go public with his word that, to the best of his knowledge, "was dishonorably discharged from the military and fought to have this reversed while he (Bill) was SECNAV, which Bill of course refused to do."
Word is that Matt Drudge has refused to run with this story, and he'll run with almost anything that smells amusing.
The operative phrase is TO THE BEST OF MY KNOWLEDGE. There's nothing in black and white about it, and the Kerry people can slap it aside with a few mentions of Karl Rove and Halliburton.