Is it lawful for an employer to ask me what position I am interviewing for?I landed an interview and policy states i should notify my supervisor..I...

 There are probably no laws that govern this delicate situation. Company policies -- and HR’s willingness to enforce them fairly -- may help you.  

Did you notify your supervisor, as required by company policy? You should ask HR whether you are required to tell him or her what position you’re seeking. You should also clarify whether  the policy requires notification only or supervisor approval. Did you discuss a development plan with your supervisor? If your supervisor refused to do so, he or she could be running afoul of company policy.

As for the denial of course funding, you should explain the situation to HR, noting that other employees received approval from their supervisors. Perhaps your supervisor’s rationale is insufficient to deny funding (even if the funds come from his or her budget, it’s the company’s money) or perhaps HR will gently persuade your supervisor to change his or her decision. (You need to think hard about whether you’re prepared for the consequences of an unhappy, and perhaps vindictive, supervisor. Perhaps it’s worth the effort to move on?)  

Disclaimer: This post contains general legal information and should not be construed as legal advice to be applied to any specific factual situation. Each reader should consult a lawyer if you want a qualified professional’s assurance that this information, and your interpretation of it, is appropriate to your particular situation.