The legal issue was whether serving in the armed forces of a non-state armed force engaged in hostilities against the US (i.e., Al Queda) would satisfy this condition.
And the overwhelming decision by every lawyer that reviewed this in the administration was that it would. Note that the linked NYT article does not say that the Obama administration admitted he was (still) a US citizen. That was added by the FP author, and the Obama administration has never conceded that point.
Note: if he had fought with ISIS instead of Al Queda, it wouldn't even be an issue, since ISIS did declare itself to be a state. Under US law, any US citizen who fought for ISIS could be treated as renouncing their US citizenship and the protection of the US constitution.
To begin with, all record of his "hostile membership" come from US administration, and not much known about him as a man, aside from him delivering a quite certain opinion as a theologian.
What is certain is that he and his family been hunted for years and killed.
It might well be the case of the "security theatre" establishment completely making up a legend of him being a "super duper mastermind," and him unwittingly (and possibly unwillingly) assuming the role.