Imo, this isn't really an OC scenario. It's neither OC nor concealed. It's half/half, which is a lame way to carry a gun imo. Granted, he's in a car, but you get my point.
One thing I have noticed in my travels is that people who have permits/who are lawfully carrying have always carried in a holster, or have it complete;y concealed in pocket. Most of the time I get a gun off an illegal carrier (felon w/firearm etc.) they have it either just stuck in a pocket, or their pants, etc. No holster. That's anecdotal, hardly scientific, but it is what it is.
I think as a matter of good practice, if I am carrying a firearm and I am in contact with an LEO, I always let them know I have a firearm on me and that I am carrying on my badge. I know a bad guy who is carrying a firearm won't come out and divulge that he's carrying upfront (it's certainly never happened to me), so it will put the cop at ease and if he happens to see it printing etc. through my clothes and I haven't said that, he might be concerned (even though carrying concealed is not itself an indicator of criminal activity, you put the cop at ease ime if you let them know upfront you are carrying and in my travels, many people I have contacted who are carrying concealed tell me "hey, I'm carrying a gun on me" and I appreciate it)
This guy is carrying a gun in a caddywumpus manner and where you would be able to see it. And he didn't let you know upon approach. So, imo he's acting imprudently. He's carrying such that an alert cop would see the butt sticking out of the pocket, which is kind of like carrying concealed... but not. He should have said right upfront when you walked up that he was carrying, since he would know it's quite likely you would notice it, so why not let you know upfront?. Not a legal requirement in any respect in my jurisdiction, just a courtesy I extend to cops and I appreciate when others do with me.
In my state, permits are in WACIC, so I'd just ask him to put his hands on the steering wheel and to give me his name and date of birth so I can confirm he has a permit. Once I confirm it, we're cool. If he doesn't have a permit, it's only a misdemeanor in my state (unless he's a felon, etc.) but it's a misdemeanor AND he lied to me about it so I'd probably arrest him for it.
Imo, it's also pretty irresponsible in states where a permit is required to carry without your permit on you. People carrying a gun, myself included, should be EXTRA responsible. It's a big responsibility, so you act accordingly - avoid confrontations with people over petty crap, be the bigger man and walk away if somebody starts harassing you, etc. Stuff like that.
I wouldn't draw down or anything like that. As long as he complied with keeping his hands on the steering wheel until I could confirm his permit via radio, his hands on his steering wheel and my gun hand alongside my holstered firearm is plenty fine with me