That is true, and I could never understand the rationale behind the initial ban, which applied to flash drives, but not other media such as CDs, DVDs and portable USB drives. I suppose if someone had taken the data by printing it out on paper they would have banned paper, simply as an earnest of their desire to "fix" the problem. And all of this applied to the unsecured portion of the military network, where classified information is not supposed to be stored or transmitted.
It included USB drives and card readers. Not discs, as you pointed out.
The USB drives were also banned. Most older systems still have that locked. With the newer computers strictly using USB connections for external devices, the newer systems allow them again.