I was arrested in college for a misdemeanor, my lawyer suggested I apply for an ARD that way my record would be clean after a short probation period. Now 3 years later the state of Pennsylvania indicates that I do not have a criminal record but when I applied for a job the potential employer said his background search found my arrest record, can he disqualify me for this? Why isn't my record "clean" like I was told it would be?

Ok, what was the job you applied for?

If you are applying for any job that is in the police field or requires a national security clearance, they will see any arrest even if not convicted and even those convictions that were cleared or espounged.

But if charges were droped after a probation period, they would not show up on a standard police record check given to the public.

But remember many business today don't use the police background checks, they hire online firms that check all sorts of data and info.
The fact you were charged is and was public record, the fact it was set up as ARD is also public record, and in today's computer world, a lot of material that is espounged or droped will show up on other search factors.

Nothing can really be hidden or done away with under today's computer world.

And yes they can disqualify you for any reason they want if the info is true.