They said on CBS News that he was honorably discharged in 1994
I don't have a link to the CBS story but here's one from CNN.
Muhammad enlisted in the Army in November 1985 and was honorably discharged with the rank of sergeant in April 1994. He was trained as a mechanic, truck driver and as a specialist metal worker.
He received M-16 expert marksmanship badge, the military's highest level of marksmanship for the average soldier. To receive the badge, Muhammad would have to hit 36 out of 40 targets ranging from 50 to 300 meters during his yearly qualification on the M-16.