disconnect switch next to the panel with locking provisions?
That product looks like it meets the rule for lockable disconnect if the disconnect is not within sight. The lock doesn't need to be installed in order for the provisions to stay attached to the breaker. So I don't know what the inspector is really commenting on. Unless that type of lock isn't suitable for the breaker.
His options were the 40 amp dp breaker with lockout molded into the breaker in the panel or a disconnect at the WH. As far as I know SE doesn’t make a homeline breaker with a lockout premolded into it.
You have kindly answered my question though. The above part does meet code.