An OTH is not authorized unless there is some other criminal misconduct that is also a basis for separation.
A general is a possible quality of discharge.
He can try to upgrade after discharge.
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You can't get an OTH under these circumstances. Worst case scenario is a General (Under Honorable Conditions.) Any discharge "can" be upgraded. Whether there is a sufficient basis to do so is determined on a case by case basis.
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If the only basis for discharge is physical fitness failure, then an OTH is not authorized. Separations for physical fitness failures are separations for unsatisfactory performance under AR 635-200, Chapter 13. As such, the worst authorized service characterization is "under honorable conditions," which is popularly known as a "General" discharge. Any soldier with a less than honorable discharge can pursue a discharge "upgrade" through the Army Discharge Review Board (DRB); however, where there are sufficient grounds for the service characterization, upgrades are rarely granted. That's not to say, that one should not be pursued, but I would first recommend a consult with an attorney who can do a complete case evaluation. Often, it's worthwhile to wait several years before pursuing such a remedy. A soldier has 15 years from the date of discharge to apply to the DRB for review.
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To piggyback on my colleagues' answers, if your friend has an OTH, then he likely was separate from the service for reason, other than or including, PFA failure. And, an effort to upgrade his characterization of service would not be able to hide that fact.
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Regardless of the reason for separation, the Soldier may apply to the Army Discharge Review Board to have his OTH upgraded. The application can be found online at their website.