Army personnel with homosexual tendencies (claiming to be homosexual), would have fallen under regulation 635-89, which covered "Personnel Separations - Homosexuality", and were referred to as "89 Cases". This regulation clearly stated that homosexuals were not permitted to serve in the Army and could be discharged at the first offense.

That being said, there were exceptions spelled out, where you could have been caught engaging in homosexual acts but still not get kicked out.

This regulation also provided a general discharge under honorable conditions to known homosexuals.

I'm not sure how references are done, but the pertinent regulation is located here

Please, remember the rules. As was explained in the excellent recent meta post on "What it means to post a good answer in /r/AskHistorians":

If you're choosing to answer a question in /r/AskHistorians, there are three questions you should ask yourself first in turn:

   1. Do I, personally, actually know a lot about the subject at hand?

   2. Am I essentially certain that what I know about it is true?

   3. Am I prepared to go into real detail about this?

Another related question: if you successfully avoided the draft/service by claiming either honestly or dishonestly to be gay, would that label somehow follow you into your non-military life?

I remember reading a biography of Jimmy Hendrix saying he was drafted and ended up getting himself intentionally caught masturbating to make it seem like his fellow male soldiers were arousing him so he could get kicked out for being gay. Can anyone confirm this? I dont even remember the book I read that claimed this, it was back in High School

I recommend the essay "Gay Politics and Community in San Francisco since World War II" by John D'Emilio, partially available here, where he advances the thesis that discharge of gay men and women from the military produced the unique gay subculture in San Francisco. This mostly deals with the postwar period, not Vietnam, but might be interesting related reading.

There is a particular court case, Watkins v. United States Army, which sheds some light on the ambiguous attitude of the military towards homosexuals during the Vietnam War. This article discusses the military's back-and forth stance towards Watkins' open homosexuality.

Why didn't more people claim to be gay to get out of the draft? Would others (civilians) know that they had claimed to be gay?