The family of Mr Peter McBride will legally challenge the decision to allow the two Scots Guards convicted of his murder to remain in the British army.
Mr McBride's mother, Jean, said: "I am really shocked and disgusted at the news. It is almost as bad as Peter's death." She said she was again receiving bad news about the case as Christmas and her son's birthday approached.
She said the decision showed nationalists were not treated with equality and respect. "It will let people see exactly what way we are thought of in Northern Ireland: that two men can murder an innocent young man and walk free."
Sinn Fein said the British army's decision legitimised "a random and brutal killing" and represented "a blatant disregard for the life of Peter McBride".
A Sinn Fein councillor, Mr Mick Conlon, said: "Had these soldiers killed English civilians they would not only have served their full sentences but been removed speedily from the British army."
The Pat Finucane Centre accused the British army of "arrogance and racism" and justifying "the murder of an unarmed civilian in broad daylight".
The Workers' Party said the "totally insensitive" decision showed "a complete disregard for the feelings of the dead boy's parents and family".
But the Ulster Unionist Party welcomed the decision. Its security spokesman, Mr Ken Maginnis, said he was absolutely delighted, adding that the army had taken a "pragmatic approach" by allowing the men to remain in its ranks.
Mr Maginnis said it would be ironic if the two soldiers were dealt with in a more harsh manner "than those who have committed well-planned, premeditated murders on behalf of terrorist organisations and are now being released back into society".