I think it is not disrespectful masturbating in front of her. But what she says is not clear enough for me. She did not explain what the problem is. Is it because you are getting satisfied during she can´t / does not want? Is it because she does not want to see it? Is it because she claims all your thoughts of arousal to her own person but cannot control your fantasies?
I can´t put the finger on it, but I think she is not very clear about what she wants. Ask her. And if she gives you an answer it will be easier recognizing if she is right or if you are.
I cannot find anything bad about it.

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