Here's my take on the situation - and this is pure hearsay:
I think the Colts feel that Simon cannot possibly play and contribute for an entire season given his weight and health problem (possibly polyarthritis as reported in some sources). It seems that the Colts feel they got cheated - maybe they think Simon knew about this health concern when he signed the contract but did not inform the team. The problem is that if they let Simon play at all and he gets hurt again (which would be highly likely for someone who is overweight and has a degenerative joint condition), the Colts are on the hook for his entire base salary for the season.
At the same time, for salary cap reasons the Colts can't simply release Simon (that would accelerate the signing bonus and increase his cap hit). Hence, they are trying to spread out his cap hit over two seasons.
So, if the Colts can effectively argue that this is a non-football injury and that Simon does not pass their physical, they can put him on non-football IR, and Irsay does not have to pay him his base salary (even though Simon's salary cap hit would not change). Basically, this just saves Irsay some cash.
That's the only thing I have been able to come up with that starts to make sense out of this strange situation.