FWIW, I take the Waterloo & City Line every day and have a Zones 1&2 season ticket on my Oyster . I never touch in at Waterloo, but I have to touch out at Bank (or vice versa) because there are physical barriers. I have never had a problem with my Oyster not working or flagging up "unfinished" journeys, not does it try to take payment from my PAYG balance.