I think either procedure is right, with full immediate GA Flap 15 being more right. But it seems to me there is nothing wrong with following the engine failure on approach procedure- increase power, select Flap 15, accel to Vref+20, select GA power, select Flap 1, gear up. I have done both in the past. It is fairly startling- in seconds you go from Flap 40 to Flap 1. However, if you identified the engine failure at 51' Radio or earlier, it is technically the right thing to do.
IMO, it was an obscene use of Trainer discretion (or lack of!). If you did either procedure correctly, I do not see in any way how that is a 'fail' in view of the short time factor available to you. I would be kicking off at the Chief Training Captain.