That was such a superfluous scene, and I must have missed something very important, because that whole scene along with the gratuitous nudity was really odd. He wasn't the werewolf right? I haven't seen this film in a very long time.
Gratuitous nudity, of course. They were like, "if this were a normal werewolf movie, we'd show Diane Venora naked; but since it's art, we'll show Adama's buff body."
It setup the fact that this is not lycanthropy both for the viewer and for Finney's character. While the Indian may feel like a kindred spirit of the wolfen, he knows damn well that he's not one of them. A little shock value helps underscore what we're dealing with here.
But seriously -- it could have something to do with the new-at-the-time treatment of shape-shifting in film. Perhaps Michael Wadleigh caught word of the brutal transformations soon to be released in John Landis' "American Werewolf in London" (1981, same year as "Wolfen"). In "American," clothing literally rips off of the werewolf's body as he transform in agony. Olmos' character would be much better off naked before he would turn into a wolf and take down Daddy Warbucks (if only). A similar kind of shape-shifting would also show up in Joe Dante's "The Howling," which also came out in 1981.
I didn't see the nudity as gratuitous at all. Edward James Olmos' character became one with nature – and the wolves. That scene is crucial to establishing his understanding of their environment, and the threat they were facing from developers.