1. I see no reason why an incontinent person should be denied a firearm.
2. The second instance must be the one that I heard about.
Incontinence can be caused by several pathologies, some mental, most physiological. The story referenced to the LIFE class was about an adult, who AS A CHILD, had a bedwetting problem. As an adult he had no such issue. However, when HPD did the background check, they used his childhood incontinence issue as the basis for denying him a PTA.
As for the DSM V reference manual that is the center of this issue, it is commonly used (in its current iteration, DSM IV) in classifying different mental conditions. It is a useful tool, to a degree, but the changes that include things like shyness in the new edition are the problem. Even within the news article, it notes an opinion that the new definitions will "will pathologise a wide range of problems which should never be thought of as mental illnesses."
Regardless, there should be some objective data that a physician or healthcare provider must provide in order to make the claim that a patient is unfit for gun ownership. And, while I support some level of immunity for those required to make the reports, I also think that immunity should be withdrawn if it was clear that a personal anti-gun agenda drove the decision to disqualify someone.