You can definitely use LIN to transport proximity sensor state.
The code example you mentioned uses UDB block to connect NSLP pin to logic 1 ( in order to make it high). Some LIN transceiver devices also have an "enable" or "sleep" input signal that is used to control the operational state of the device, so this NSLP pin is used. But CY8C4146PVS-S432 does not have UDB, so you are getting the error. To remove the error, just delete the Logic 1 component, and in configuration of the NSLP pin, disable the hardware connect and make initial drive state "High".
In the project, you have removed the NSLP pin, so it may/may not work depending upon the LIN trans-receiver/shield kit. So it would be better not to remove the pin, but instead remove "logic 1" component as I have explained, and drive it to High state.