Consider a Dp-brane. Compactify $d$ spatial dimensions over a torus $T^d$. Suppose $d\geqslant p$, and that the Dp-brane is completely wrapped around the compactified dimensions.
Look at the open string modes ending on this wrapped D-brane. There is a zero energy open string mode associated with each spatial dimension. That corresponds to the orientation of the worldsheet field excitation. If the direction is along an uncompactified spatial dimension, that corresponds to quanta of brane displacements along that direction. These cases needn't concern us. If the direction is normal to the brane but lies along a compactified dimension, that corresponds to quanta of brane displacements along that direction. If it's tangent to the brane, it corresponds to quanta of the Wilson line of the brane gauge field along that wrapped direction.
Here's the question. Suppose the wrapped D-brane has a total mass of $M$. Suppose there is a compactified spatial dimension of radius $R$ along which the brane isn't wrapped, i.e. $p<d$. The brane has Kaluza-Klein momenta along that direction of value $n/R$ where n is integral. The energy spectrum is given by $$\sqrt {M^2 +n^2/R^2} ~\approx~ M + \frac{n^2}{2MR^2} +\mathcal{O}(M^{-3}).$$ A condensate of zero energy open strings with orientation along that direction ought to give a continuous moduli? Why is there no moduli then, and why is the energy spectrum discretized? Or consider a direction in which the brane is wrapped. We ought to have a continuous modulus of Wilson line of the brane gauge field along that dimension? Once again, we have discretization. Why?
Anyway, how can a completely wrapped D-brane have KK momentum? In the string worldsheet picture, we have open strings ending at the D-brane background at a fixed position. Along those compactified dimensions along which the brane isn't wrapped, we have Dirichlet boundary conditions. Such open strings can only have winding numbers, but no KK momentum either. Even then, we're dealing with a condensate of open strings with zero winding number.
This discretization doesn't occur if the brane remains unwrapped under at least two uncompactified spatial dimensions because the brane now has infinite mass. If it remains unwrapped only along one uncompactified spatial dimension, there's the Mermin-Wagner theorem, meaning there’s no fixed brane position or Wilson line.
PS: Maybe this question can be rephrased in terms of BPS. We have a wrapped BPS brane. But nonperturbatively, somehow, the BPS state has to be delocalized along the compactified dimension or its Wilson line in a superposition over all possible values? Open strings with no energy are also BPS. So, we can have any condensate of them and still remain BPS? This clearly isn't the case with a lifted modulus, and a discretization of the energy spectrum.
PPS: How do you even express the KK modes of the D-brane, or the dual to its Wilson lines, in terms of a condensate of open strings? Suppose you have the lowest energy state with zero KK momentum. Then, disregarding transverse displacements along the uncompactified spatial dimensions, there is an energy gap to the next energy state. However, a condensate of open strings with internal mode excitations along the compactified dimensions would naively give no energy gap.
PPPS: Is the number of open string modes corresponding to these "disappearing moduli" even a well-defined operator? This is precisely because at the perturbative level, such open string modes have no energy. If it's not a well defined operator, just how do you even express this in terms of open string worldsheets?