Hi
I was able to create SD credit memo from Dispute management. I followed the way Mark has described
Created Function icon
Activated BADI
Copied some of the document details (ex; Sales org, Dist channel, division from original document)
Each time Credit memo Function is called , we called "VA01 transaction with above details"
Once credit memo is created, we came back to Dispute management screen
Within dispute management screen we also created new field so that the credit memo number can be saved for future references
Hope it helps