I think the way to look at it is this; if you removed ALL bacteria from a human body, it would kill us. We have bacteria in us that is actually helpful and important to the working of our bodies (our gut is full of them, for instance). This would suggest that the decontamination can identify these helpful bacteria and doesn't kill them.
Now we must assume that Time Lords have a similar physiology, based on what the Doctor says here. However, their helpful bacteria is not going to be the same as the humans' helpful bacteria. Therefore the decontamination machine wouldn't be able to tell the difference between the Doctor's helpful bacteria and good, old, nasty germs.
Therefore it would decontaminate him of all the little bugs that help his body work, because they are unknowns.