To answer your question, you were properly openly carrying your pistol by placing it in the passenger seat of the car. Alternative methods would be to have it in your belt holster or to have it on the dashboard (but that might have it slide around and be impractical).
As far as your police encounter goes, I'm assuming you didn't have an audio recorder on you. If I were you I'd file a public records request for their squad car video, the officer's audio recordings, any memos or reports written about the encounter, any department memos or training those officers had regarding open carry, and the dispatch recording during your encounter.
Sorry to hear about the cops harassing you. Stay sharp and welcome to opencarry.org.