Having been raised a Lutheran and knowing their pride of using a pipe organ for hundreds of years in their worship service, and after I became a Christian in 1974 I did not find it quizzical that Lutherans are inconsistent with Luther on many points, including instrumental music. When I read "The organ in the worship is the insignia of Baal! The Roman Catholics borrowed it from the Jews." in J.D. Bales book, I took it at face value. I see you have also quoted it as have many others. Through time, I realized the only source quoted was McClintock and Strong. When I was doing my university work, I had access to a library at a Methodist college in Montgomery which had a vast holdings of Lutehrs writings. Now, I dod not read all of them, but searched the indexes to find this quote. I could not. That is not to say that he did not make such a statement. Since you have quoted McClintock and Strong, I was wondering if you have come across any original citations of Luther that would support McClintock and Strong?
McClintock and Strong's Cyclopedia of Biblical, Theological and Ecclesiastical Literature was originally published in the late 1895. It is a twelve volume encyclopedia on religious topics and has proven itself to be highly accurate. The fact that people are quoting this source work is no different that people quoting the Encyclopedia Britannica regarding an issue. No, it is not the original source, but it doesn't make it any less valuable as a resource.
I went back to the McClintock and Strongs and pulled the full quote:
The early Reformers, when they came out of Rome, removed them as the monuments of idolatry. Luther called the organ an ensign of Baal; Calvin said that instrumental music was not fitter to be adopted into the Christian Church than the incense and the candlestick; Knox called the organ a kist [chest] of whistles. The Church of England revived them, against a very strong protest, and the English dissenters would not touch them.
Notice that they do not say this is not a word-for-word (which makes sense since Luther would have written in German). Somehow the quote from McClintock and Strong became garbled a bit. I edited the original article to make it more accurate.
For sources, McClintock and Strongs gave:
On the general subject of the music and musical instruments of the Israelites, see Martini, Storia delta Musica (Bologna, 1757), 1:4 sq.; Burney, General Hist. of Music (Lond. 1776), 1:217 sq.; Schroter, De Musica Davidica (Dresd. 1716); Hawkins, Hist. of Music; Forkel. Gesch. der Musik, 1:99 sq.; Calmet, Dissert. sur la Musique des Hebreux, annexed to his Commentary on the Psalms; Bedford, Temple Music (Bristol, 1706); Pfeiffer, Ueber die Musik der Alten Hebr. (Erl. 1799; transl. in the Amer. Bible Repository, 1835); Saalschutz, Form der Hebr. Poesie, page 329 sq.; also Gesch. und Wurdigung d. Musik bei den Hebr. (Berl. 1829); Harenberg, Comm. de Re Musica Vetus. in Misc. Lips. 9:218 sq.; Sonne, De Musica Judaeor. in sacris (Hafn. 1724); Tal, Dicht Sing und Spielkunst bes. der Hebr. (Frankf. 1706); Jahn, Biblische Archaologie; Reland, De Spoliis Temp. Hieros.; Anton, Die Melodie u. Harmonie der Alt. Hebr. in Paulus, N. Repert. 1:160 sq.; 2:80 sq.; 3:1 sq.; Shilte Haggibborim, in Ugolini Thesaur. volume 32; Contant, Traite sur la Poesie et la Musique des Hebreux (Paris, 1781); Beck, De accentuun Hebr. in Mencken, Thesaur. page 563 sq.; Abicht, Vindiciae accentuum (Lips. 1713); Excellentia musicae antiq. Hebr. (Munich, 1718); Schneider, Bibl.-gesch. Darstellung d. Hebr. Musik (Bonn, 1834); De Wette, Commentar. uber die Psalmen; Rosellini, Monumenti dell' Egitto; Wilkinson, Anc. Egyptians; Villoteau, Sur la Musique des Orientaux, in Descript. de l'Egypte; Lady M.W. Montague, Letters; Volney, Voyage en Syrie; Tournefort, Voyage au Levant; Niebuhr, Reisebeschreibung; Russell, Nat. Hist. of Aleppo; Lane, Modern Egyptians, 2:69 sq.;
Thomson, Land and Book; Engel, Music of the most Ancient Nations (Lond. 1864); Hutchinson, Music of the Bible (Bost. 1863).
Whether one of these is where the quote from Luther came, I would not know.