The lock function only locks the touchscreen. It does not lock the physical buttons - play/pause, previous track, next track and volume control.
I am not sure if lock has anything to do with touch screen. When it's locked, I can still operate the touch screen and when the screen's shut off, I cannot bring it back using touch screen. Only wheel button can. According to Iriver tech, lock feature only disables the volume control (by wheel button) only when the screen's off. That's is what I am experiencing unless my unit's bad.