There is no way that even a large city would be expected to accommodate 25000 surprise guests. When armies show up they bring their own accommodations.
Even though Babylon 5 is quite large, it is also quite full. There is no way such a space station even one that big, could be expected to handle that many more people. Even if they could find rooms for everyone, the life support system would be over stressed.
It seems rather strange that the only two people in charge of 25,000 troops are a general and one Sgt. Major. There should have been a lot more officers and non-coms.
General Franklin is discussing a highly classified mission with random technicians working in the background.