It does not necessarily imply a dishonourable discharge. A self inflicted wound does not have to mean shooting yourself in the foot to avoid front line service. Let me give you an example; a soldier is posted somewhere hot, and stupidly ignores standing orders by not wearing the proper headgear. This results in a severe case of heatstroke, which permanently affects the man's eyesight, rendering him unfit for further military service. This could be classified as a self inflicted wound, and the man might even be charged with damaging government property, namely his own body. But if he were discharged under such circumstances, it would probably not be classified as dishonourable.
It could also be that your man was injured in training, or possibly developed an illness which the Army decided was the result of a pre-existing condition. If that were the case, they might feel justified in revoking his entitlement to the SWB. The options are probably endless, but not necessarily anything sinister!
Swampy