I have to set the generator on the side of my home where my current sub panel is (opposite side of the home from where my meter and disconnect is). My HOA had a rule in place for years that no generators were allowed. The rule was finally overturned, but the new modified rule is that the generator can not be set on the side of the home that adjoins the neighbors bedroom space. If there's no issue with bringing my utility feed into the transfer switch, then that's what I'll do. The bonus for me is that my gas supply is less than 10 feet from where I'll set the generator. I guess I'll have to ask the question "is there an issue with having the 2 disconnects and hopefully I'll be able to land my service cable in the transfer switch panel", I'm not sure what the largest size wire that the lugs will accept in the switch. My past experience (4 generators installed), was always with prewired dedicated circuit transfer switches and service panels with the disconnect in the panel. My current situation is new to me. The generator and switch will be delivered tomorrow, so I guess I'll find out. Thanks for the reply.
The reason for the outside disconnect is the length of feeder between that and your panel.
The feeder is usually not protected by an over-current device, so if it's over a certain length, code requires your setup.
Your installation may be simplified by mounting your SE rated transfer switch in place of your outside disconnect.
This would eliminate the need for your generator feeder to enter the house, which may greatly simplify the install.
The utility breaker in the switch would then be your service disconnect.