My squad leader has given me a directive to no longer allow one of my soldiers to eat anymore sugary foods. Am I even allowed to do that?

I don't think this is necessarily illegal, per se, however, I don't think it is the best idea. The better option would be for your squad leader to direct him to a medical professional for a consult to a nutritionist to work on the soldiers overall diet, and perhaps an exercise physiologist to work on a routine that will get them under a specific weight. From a medical standpoint, completely eliminating certain foods from a diet (even junk food) can have serious negative consequences in the long run, so setting a plan with moderation under certain guidance would be a better idea. Just my two cents.

So your Squad Leader is ordering one of the troops to have a better diet and to stay away from the fat pills? I fail to see the problem. I fail to see this as an illegal/immoral/unethical order.

No, SL is quite wrong. They may not dictate what a soldier may or may not eat. They may however enforce the Soldier making an appt with the BDE nutritionist/dietitian who can in consult with the CO and/or PA/DR.