I don't know what a therapist was thinking, telling you to not take away the guitar, but it seems to me that if THAT is what is occupying all your son's time *by your own admission, it is 'all he does'*, then THAT is what needs to be removed from the equation. If he wants it back enough, he will buckle down and take his studies more seriously. My sons know that every day there's a pattern... the things that are duties and obligations come FIRST, always, without fail, and then the bonuses and recreational activities, etc., come AFTER. That's what your son would be better off learning when it comes to the guitar.
I'm all for the military, especially for people with personal accountability issues. It can certainly help to make a better person, or at least a more productive one.
No, you can't make him care. But you CAN make him realize that life is going to pretty much suck until he gets his proverbial sh** in order, giving him the motivation to put forth effort, whether he 'cares' or not.
Think 'carrot on a stick'...