Specifically, were Nisei allowed to join the military with the first draft in 1940? I'm not clear on what that initial draft actually accomplished, or if the U.S. had much of a standing military between World Wars, or if tensions between Japan and the U.S. were already high enough that Japanese Americans felt it at home. Further, if a Japanese American wanted to join up and was allowed to, would he then be removed when internment started?
Good questions. I'll try to take them in order.
The US didn't have much of a standing military between the wars. The Draft 1940-1941 was mainly trying to address this problem. I'm not sure if first generation Japanese were allowed to join at that stage.
Tensions between Japan and the United States were already apparent. You get into crazy debates on this timeline for some reason on Reddit, but in the oral histories I've conducted and through reading other sources, you can see that while people were genuinely surprised an attack happened when and where it did - existing strains in the Pacific meant that people weren't really as shocked by Pearl Harbor as our historical memory suggests.
Once they were taken to the camps the men of draft eligible age were given a loyalty questionnaire.
Borrowing from a good source on this online - Question #27 asked: Are you willing to serve in the armed forces of the United States on combat duty, wherever ordered?
Question #28 asked: Will you swear unqualified allegiance to the United States of America and faithfully defend the United States from any and all attack by foreign or domestic forces, and forswear any form of allegiance to the Japanese Emperor or any other foreign government, power, or organization?
So here is what happened to you when you took the loyalty oath. If you answered yes to the questions you were given a chance to join the military. The 442nd unit of Japanese Americans fighting in Europe famously becomes one of the most decorated in the entire war. Those who answered "No" to both questions were considered by the government to be more risky or troublesome than others. They were separated from their families in camp and sent to another camp, Tule Lake. (Young men who answered "No" to both questions were colloquially referred to as "No-No Boys")
More reading: Densho.org
By Order of the President: FDR and the Internment of Japanese Americans by Greg Robinson
Prisoners Without Trial by Daniel Rodgers
Lastly - http://www.nps.gov/manz/index.htm