Sometimes the instructors at an "A" School will recommend that a student be placed in the next class and begin training again, but sometimes the recommendation is that the student not continue in the program. If the decision is that he not continue in the Nuke program, and that's what it sounds like, then he will speak with a Career Counselor and get a new contract for a different rating or one of the PACT programs and then head off to training. He will have less time in Holding than some who just arrived at the next "A" School or training facility because he will fill the next available seat in a class (at least most schools do that).
It depends on if his advancement was solely based on his Nuke contract or if he qualified for it based on other factors. He MAY be able to keep the rate, but it is possible that he would be moved back to E-1 if the advancement was based on his Nuke contract. If he has been in the Navy 9 months, then he would stay E-2 since advancement to E-2 is based on 9 months Time in Rate (TIR) for those moving up from E-1.
I would think that he has been in the Navy at least 9 months since he was in SC when you joined in April and his time began on the day that he was sworn in on the way to the RTC.
When my ex-sailor was a freshmen in high school, he got a D in advance math. He dropped out and went back to regular old math (can not remember whether it was algebra or geometry). His teacher and we couldn't figure out why he was doing so poorly. Dropping out allowed him to relax. Well, he scored a perfect 800 in the math section on his SAT. He went on to get a degree (graduated with honors) in electrical engineering from a highly ranked university with an excellent engineering school. He became a nuke officer (and was nominated for junior officer of the year). He finished his commitment two years ago and is doing excellently in the civilian world.