A note on conservation of energy after the lock: CoE isn't just a physical law, it is a mathematical/logical necessity and therefore a useful tool for solving problems. All that you accomplish by trying to solve a problem without COE is to first derive COE, then use it to solve the problem! That's just a waste of time. Consider the simple example of calculating the speed at which a dropped rock hits the ground. The two approches are:
1. Using COE, you can set the potential energy at the beginning equal to the kinetic energy at the end and solve for V.
2. Combine f=ma, V=at and d=Vt, and solve for V. Along the way, you'll discover you're doing most of the work to derive KE from PE!
Why bother re-inventing the wheel? There would need to be a pretty compelling reason and I'm not seeing one here. More importantly, the more complicated the problem gets, the more difficult the derivation gets. Therein lies the essence of most perpetual motion claims: the more complicated a problem gets, the more likely the claimant is to make a mistake that implies perpetual motion is possible (interestingly, they never make a mistake that implies it isn't!). In this problem, the mistake was simple: increase the number of "pads" by a factor of four and you must decrease the amount of energy each collects by a factor of four. This is easy enough to see by simplifying the problem to isolate the "pads":
Consider a situation where there are no losses except for the extraction of energy by the "pads". The car rolls freely from the top of the hill to each pad, where the pad stops the car and recovers all the energy. Increasing the number of "pads" by a factor of four simply divides the distance the car travels between "pads" by 4, making the COE equation look like:
PE = EPad1 + EPad2 + EPad3 + EPad4
mgh = mgh/4 + mgh/4 + mgh/4 + mgh/4