Michael -
From the Focal Stats help - "If the input raster is of floating point type, only the Mean, Maximum, Minimum, Range, STD, and Sum statistics are available; the Majority, Minority, Median and Variety statistics are not permitted. If the input raster is of integer type, all the statistics types are available."
Question - is your DEM a floating point type raster? If so, then you use the INT geoprocessing tool to change the cell format to integer and then run the Focal Stats tool for the median statistic type.
Hope this helps,
Robert LeClair
Esri-Denver