It certainly does not have a bad reputation. Quite the opposite, in fact. The OU is one of the most highly respected universities in Britain, if not the world. They have higher student satisfaction rates than any university in the UK and many countries have copied the idea successfully over the years.
Your OU degree is as good as anyone else's, possibly better. Many employers favour them over those gained by the the more traditional route. It means you're well motivated, a self-starter with a high level of endurance and academic staying power. Unlike most students, you'll have spent your time at Uni actually studying and learning rather than in the bar or someone else's bed!
That's why it's currently celebrating its 40th anniversary and has more students than ever before.
I'm sorry, but I think this student services woman either needs some training, a change of attitude or her P45.