I saw it as he chose to keep his memories. Now he is in 'prison' as they threatened and forced to relive 'all those murders' in a loop. I assume that the girl he is dreaming about is someone real from his past. When he is recruited into the military unit, they wipe his memory, but the dream sequence they give him (and the other soldiers) to relax is based off a real person from his past since they know he will react positively to her image and be attracted to her even if he doesn't remember who she is. They also never divulge how they recruit you...possibly convicts with no options in life and no more conection to the real world. That's probably why they had him act kinda lost and thuggish in the throwback scene showing his recruitment. I think his 'prison sentence' starts with him reliving something bad that happened between him and this women that led to his eventual recruitment. He has his memeories and cries because he not only now recognizes her, but knows he is about to relive something horrible. It's a full immersion punishemnt where they overlay reality with virtual images, sort of like the tech they used in battle. The car that drops him off probably eventually picks him up later for another stage in his sentence...hence forced to relive all those murders in a loop. The first murder likely being that of the lady at the house...
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