From Help:Name Fields, "If a person has multiple prefixes or titles use the highest, last or preferred one, e.g. Capt. over Lt.", so I would use his highest rank of Sgt.
As for the usage of the prefix, there is no single answer. In the United States, there are standards for use of rank by those who retired from military service or are inactive reserves, and different standards for veterans (who did not retire). This will also vary by country.
On WikiTree, there are some members who will only identify the rank in the Prefix field if the profile is that of a career military personnel, or if they died while serving.