Dietrich failed out in Third-Phase of USMC Bootcamp. He barely qualified with a rifle in Second Phase and I am confident that he probably failed because he was unable to meet the physical requirements of field training. I believe he may have failed a "second-chance" at Swim Qualification before the final recruit battalion exercise.
This was way before "the Crucible". But given the dates on his DD-214 and the fact it takes 2-4 weeks for processing out a failed recruit - Something must have happened in the late 2nd Phase, after the rifle qualification.