Consider the date of the rejection. This was well before criticism of Western civilization and philosophy became mainstream. Given that he was working in the humanities, I'm not at all surprised his thesis was rejected. Acceptance of a thesis relies not just on how well an argument is made, but whether people agree with the actual premise.
Wouldn't that have been something that was ironed out before the actual thesis was written?
In the UK system, your adviser does not examine your dissertation. Your adviser helps you through the process, recommending bibliography, reading drafts, and offering suggestions for changes. Because of this help, the adviser is seen as lacking impartiality. Thus, two other academics read the finished manuscript, offer criticism, examine/ask the author to defend himself, and ultimately accept or reject the work as a substantial piece of scholarship (or not).
St. Justin's mentor, also an Oxford man, encouraged St. Justin to study in Oxford. Once Justin got there, however, he did not like what he saw. He refused bursaries or scholarships from the University, since he felt accepting money from a corrupt system would corrupt him. So it took him something like 10 or 12 years to write his dissertation, because he held down various jobs to support himself. He also refused to change the conclusions of his dissertation, despite his adviser's recommendations. Once it was rejected, he went to Athens, I believe, and received his doctorate there.
All that's according to various friends at Oxford, who heard it from Met. Kallistos, I believe.