I could be wrong (it wouldn't be the first time), but it seems that inspector wants you to use the 4-wire because the 200amp main panel isn't at the nearest point of entrance as required by article 230.70 (A) (1).
Also, the grounded conductor isn't the bare conductor, that's the bonding conductor. The grounded conductor is commonly referred to as the neutral conductor.
You will have to install a service disconnect (main disconnect) at the nearest point of entry, or beneath the meter on the outside of the house. This is where your GEC (article 250.66) EGC (article 250.122), and GROUNDED conductor (article 200) from the POCO will all be bonded together to create a solidly grounded electrical system.
I hope I have helped.
Good luck!
--Ron
[This message has been edited by ShockMe77 (edited 01-04-2006).]
