Because in addition to room/board/tuition, those at military academies are also paid a salary. It's above and beyond cost of schooling, and goes directly to the students instead of to defray education costs. I think that's the "direct" part of "no direct pay".

You are not paid a salary while in a military academy, you are given a stipend from which they deduct food, board, and other costs.

jkeuhlen covered it.

Students at the military academies are both on full scholarship (tuition and board paid by the taxpayers) and salaried. After required [non-academic] expenses (uniforms, laundry, etc) the "take home" is tiny. But, that doesn't negate the fact that they are salaried employees of the US government.

And, just to be clear, I'm in no way arguing students at the service academies are over-paid, or shouldn't be paid, or anything like that. I'm just curious if they have an explicit exemption from the NCAA, or if the NCAA isn't following it's own rules.