The "permitted if all exposed hinges are padded or covered."
phrase says that they are permitted if padded or covered, not
"ONLY permitted if all exposed hinges are padded or covered."

So, they are permitted either way, making the statement logically true, even if the test intended false.

I don't agree
 

The phrase is adding a requirement not intended by rule, thus making the statement false. The question is saying that the exposed hinges have to be covered to be allowed. This is not the case.

Are you going to disallow the player to wear the brace if exposed hinges are not padded? That's what this question is getting at.

Of course not, will also allow if they are padded.

As a matter of the English language and logic, your first sentence is simply wrong. The phrase adds a requirement not intended by rule, thus not affecting the veracity of the statement at all. You can drive 60 on the freeway legally in Washington if your radio is on is a true statement.

The test means to ask: True or false: The rule is that you can wear an unmodified brace if the hinges are covered. That's false. But the statement they actually ask for is true. One of the reasons I hate test questions like that.