return in for loop or outside loop

Now someone told me that this is not very good programming because I use the return statement inside a loop and this would cause garbage collection to malfunction.

That's incorrect, and suggests you should treat other advice from that person with a degree of skepticism.

The mantra of "only have one return statement" (or more generally, only one exit point) is important in languages where you have to manage all resources yourself - that way you can make sure you put all your cleanup code in one place.

It's much less useful in Java: as soon as you know that you should return (and what the return value should be), just return. That way it's simpler to read - you don't have to take in any of the rest of the method to work out what else is going to happen (other than finally blocks).

Some people argue that a method should have a single point of exit (e.g., only one return). Personally, I think that trying to stick to that rule produces code that's harder to read. In your example, as soon as you find what you were looking for, return it immediately, it's clear and it's efficient.

Quoting the C2 wiki:

The original significance of having a single entry and single exit for a function is that it was part of the original definition of StructuredProgramming as opposed to undisciplined goto SpaghettiCode, and allowed a clean mathematical analysis on that basis.

Now that structured programming has long since won the day, no one particularly cares about that anymore, and the rest of the page is largely about best practices and aesthetics and such, not about mathematical analysis of structured programming constructs.

Now someone told me that this is not very good programming because I use the return statement inside a loop and this would cause garbage collection to malfunction.

That's a bunch of rubbish. Everything inside the method would be cleaned up unless there were other references to it in the class or elsewhere (a reason why encapsulation is important). As a rule of thumb, it's generally better to use one return statement simply because it is easier to figure out where the method will exit.

Personally, I would write:

Boolean retVal = false;
for(int i=0; i<array.length; ++i){
    if(array[i]==valueToFind) {
        retVal = true;
        break; //Break immediately helps if you are looking through a big array
    }
}
return retVal;

There have been methodologies in all languages advocating for use of a single return statement in any function. However impossible it may be in certain code, some people do strive for that, however, it may end up making your code more complex (as in more lines of code), but on the other hand, somewhat easier to follow (as in logic flow).

This will not mess up garbage collection in any way!!

The better way to do it is to set a boolean value, if you want to listen to him.

boolean flag = false;
for(int i=0; i<array.length; ++i){
    if(array[i] == valueToFind) {
        flag = true;
        break;
    }
}
return flag;