Disallow Breaking Generated is set to true on our server, but players can still break the village waystones.

The option only applies to Waystones that were generated after the update to 4.0.49+. Have they maybe been around longer than that?

Negative. New multiplayer server. Waystones_1.12.2-4.0.54.jar is the only version thats been used.

It wasn't marking them as generated properly, which has been fixed in the latest version. Previously generated waystones will continue to be breakable. If you want to "force" a previously generated waystone to be marked as generated, you can replace it with the name %RANDOM%.