The area for dedicated electrical equipment indoors is 6'6'' and 30'' wide and 3' in front of equipment correct? There is a water heater and water lines in very close proxity of all those measurements and equipment. anyone had issues with inspectors or know if this would still violate the requirements for dedicated electrical space. All this is happening at service entrance area.
Dedicated space is space above and below the plan view space occupied by the equipment ("footprint of the equipment"), that is dedicated to the electrical installation. It prohibits foreign systems from crossing equipment such as panelboards, disconnects, and switchboards, in the space beneath the equipment to the floor, or above the equipment to the structural ceiling, or to 6 ft above the equipment if the ceiling is much higher. The intent behind dedicated space is to allow space for conduits to enter and exit the equipment in question, and to keep foreign systems from contaminating the equipment in the event of a leak. It is OK for unrelated electrical raceways to cross this space, or for other electrical equipment to be in this space, as it is dedicated to the electrical installation as a whole, just not foreign systems.
Working space is different. The intent of working space rules, is to enable a typical human body to have plenty of space available to comfortably work on the equipment. Working space is what is 6'-6" tall, 30" wide minimum, and a depth dependent on voltage and back-surface condition. Work space occurs in front of serviceable sides of the equipment, and needs to fit the virtual "refrigerator box" in front of it, that represents safe working space for a person to work. It is OK if other stuff is immediately next to these dimensions, as long as the space is clear. The only stuff that is permitted to encroach upon this space, is raceways such as wire troughs and structural supports such as housekeeping pads, that are allowed to penetrate up to 6". If your space is questionable, an inspector might check it with a tape measure to be sure it complies. If it complies, you should pass, unless there is another unrelated safety issue for why you would fail.