NROTC departments in general or just the one at VMI? I can only speak for the one at VMI...
VMI specifically. I am good friends with a grad and former NROTC instructor there in the '03-'06 timeframe and he is one of the finest folks I know so I'll be interested to know his take on it and if things were different than when he was there. From what you describe though it seems in line with a handful of other things he described about the school, where they did few things under the table.
Fortunately at the Citadel, at least when I went through back in the dark ages, the attitude of the unit was completely different and much more welcoming. So it sounds like it was unit specific, and probably CO-specific too, like it is in the rest of the Navy.