Elert has an unfortunate tendency of conflating divine hiddenness with the category of law. He gets this from the Erlangen tradition going back to Theodosius Harnack, who insisted that God's activity of law in Luther's thought was identical with what Luther referred to as divine hiddenness.
This is a problematic theory for a number of reasons- the first theological and the second historical, insofar as this is a bad reading of Luther.
The theological problem with this is that if one goes down this path one ends up denigrating the law. Luther says that the hidden God is not one we want to deal with. We should ignore him, etc. Ultimately the hidden God is, Luther claims, overcome by the revealed God. If that's so, gospel is authentic and law isn't. For this reason, it has no place in the Christians life. Rather it is to be negated, not fulfilled.
In the case of Theodosius Harnack, this is not true. But his son, the Liberal Protestant Adolf Harnack ended up writing books like Marcion and the Gospel of the Alien God, where he claimed that Marcion was the only person who really understood Paul and then proceeded to advocate the removal of the OT from the canon. Elert himself is a little shaky about whether or not Christians should keep the OT, though in the end he decides for it.
The second problem has to do with the interpretation of Luther. There have numerous debates about what Luther means by divine hiddenness. The best explanation that I have read are from B.A. Gerrish and Gerhard Forde.
Gerrish suggests that language about divine hiddenness in Luther takes take on two forms. He refers to them as "Hiddenness 1" and "Hiddenness 2."
"Hiddenness 1" refers to God's hiddenness in revelation. Luther states that when God reveals himself he hides himself. He hides himself in the darkness of Sinai, the Temple, and the flesh of the crucified Jesus. This suggests a prioritization of hearing and therefore faith, over vision as a medium of revelation. We see one thing, and hear another. Because of this hiddenness, our reason is blunted and we are unable to ascend to God by our intellectual contemplation. This is a rejection on Luther's part of Aristotle's concept of knowledge being applied (as it was for Thomas Aquinas) to revelation. All knowledge for Aristotle is a form of vision that makes the beholder correspond to the object that they behold. Luther shows that faith makes us recognize our sin and ignorance, and therefore become less like God. Therefor by being less like God we get closer to him through the cross.
"Hiddenness 2" refers to God hiddenness in creation and providence. Now, this is what Luther means by hiddenness in Bondage of the Will and other works that deal with election. This hiddenness is not God operation as law, but it can function as law. Let me explain.
Divine agency in Luther functions in a paradoxical disunity. All creatures are masks of God (larva dei). They are mediums through which God acts. He either acts in his law or his grace. Creatures suffer this actions. The main problem with this is making sense out it. First, God acts in completely contradictory manners through law and grace. He either demands or unilaterally blesses. These are simply opposite ways of acting, yet they are the actions of one and the same God. Secondly, as Forde puts it, God is always "shuffling" the masks. So, he says "I will have mercy on whom I will have mercy, and condemn whom I will condemn." There's no telling why he uses his creaturely masks to do one thing to his creatures opposed to the other. He elects some, and allows others to suffer the consequences of sin-who knows why.
Therefore, this hiddenness is the mysterious unity of the God of law and the God of gospel above these dual operations. It is a necessary consequence of the law-gospel dialectic.
Now the confusion comes from Luther's statement (quoted in the Formula of Concord) that the law is anything that accuses or threatens. When we speculate about the hidden God, then then hidden God becomes law for us. In other words, people who speculate about the hidden God come to recognize him as a threat. Therefore they try to comes up with reasons why he has mercy on some and not others, and then invent legalistic theodicies to justify themselves: "Oh, well, the hidden God won't get me- he only gets people who don't make their decision for Jesus [insert any other legalistic scheme here]."
Therefore "hiddenness" can function as law, but terms of divine agency it is not identical with law. Here's where the mistake on the part of Harnack and Elert comes about.