Which aspects of "An Episode of War" did you find tragic or unsettling?

I think that the level of tragedy and unsettling reality rises to a particular point when the soldier is confronted with the reality of losing his arm.  There is something truly unsettling when the soldier protests to the doctor about how he does not want to have his arm amputated.  The unsettling nature of this moment comes in our collision between the valor and stoic stereotype of war and its agonizing reality.  This depiction of the soldier is one in which no harm can come to them.  They are almost "super human" in what they can do.  Yet, the reality of war is that soldiers are human.  In seeing the soldier plead against amputation when there is no other path highlights this collision and the results are unsettling.  The fact that the narrator simply and tersely describes this as “the story of how the lieutenant lost his arm" is even more unsettling.

There is a tragic tone from this point onwards.  When the soldier's loved ones weep in sight of the empty sleeve that used the represent his arm, one almost feels as if death would have been a more desirable alternative.  There is something horrific in the experience of war and tragic from the point of view of the soldier. The soldier "stands ashamed" and is filled with complexity of emotion.  This highlights the tragic condition of the soldier who fights in war. They return with a myriad of emotions and nuanced subjectivity within them.  The tears of the women who love him and the awkwardness of the moment is cut again with the almost unnerving banality of the entire "episode of war."  What is something so significant and so powerful is seen as simply a part of the war experience.  This is tragic in its purest form.

Which parts of Stephen Crane's "An Episode of War" are particularly tragic or unsettling?

"Is tragedy the result of excessive pride, or is it the result of a cruel twist of fate?" (http://www.enotes.com/tragedy-reference-guide/tragedy).  This is an old question that perhaps never will be settled.

In the short story, "An Episode of War," by Stephen Crane, the catastrophe that befalls a lieutenant in the American Civil War seems to be no more than a cruel twist of fate.  

At the beginning of the story, the lieutenant is involved in a harmless, mundane activity: he was dividing a big pile of ground coffee into smaller portions for each group of soldiers under his command.  

Suddenly the lieutenant cried out and looked quickly at a man near him as if he suspected it was a case of personal assault. The others cried out also when they saw blood upon the lieutenant's sleeve.

The soldiers, and the lieutenant, are stunned by the randomness of this attack:

[The men were] astonished and awed by this catastrophe which happened when catastrophes were not expected.

The rest of the story describes the lieutenant's long, solitary walk toward a field hospital, the botched bandaging of the wound by a man who claims to know how to bandage wounds, and the eventual amputation of the lieutenant's arm.

When the lieutenant arrives home, his family cries, but he replies:

"Oh, well," ... "I don't suppose it matters so much as all
that."

As it often appears in life, things happen for no apparent reason and one has no idea how to respond.  This is even crueler than the idea that tragedy is a punishment for excessive pride.  In that case, at least, one can learn from one's mistake.  

In this story, Crane has perhaps gone beyond tragedy and entered into what would come to be known as existensialism, a philosophy that stresses, among other ideas, that we live in a world that is totally incomprehensible.  

What aspects of "An Episode of War" are unsettling regarding war?

In the midst of the horror that Crane depicts, I think that the struggle for the soldier to keep his arm is one of the most unsettling parts of the story.  The opening of the soldier rationing out coffee to his soldiers and then ending with his protestations that he will not lose his arm, only to find the empty sleeve of his uniform flapping where his arm used to be is terribly unsettling.  Crane is able to illuminate a condition of war that is vast in its scope, but specific in its horror.

The soldier has endured so much with his wound that it almost seems that redemption and unity would exist in having his would tended to and then returning to action.  The soldier's protest to the doctor that he will not lose his arm is in vain, like so much of the solider's experience.  The soldier fights war, wanting to live and repelling death.  Yet, the only constant in war is death, and thus, like the lieutenant who protests, but does so in vain, so is the life of the soldier in war.  This is unsettling and tragic.  Such a condition is confirmed with the narrator's assessment of the situation:   “the story of how the lieutenant lost his arm.”  A most horrific condition of being is simply labeled as "an episode of war."  The chilling banality with which the lieutenant's story is relayed helps to convey another aspect of its tragic state.