I don't think it's a complete mind wipe. That would be pointless. All of the Marine's training and experience would go out the door. More importantly, the person that became the Marine, the most essential part, would be gone. After all, Space Marines are individually chosen. I think they just lose the 'bad parts' of the times they served with the Inquisition. They remember mowing down cultists, smiting a few daemons, but that part about that glowing book containing the secrets of the universe gets edited out.