This narration is in Sunan Abi Dawood (volume 1, page 495). It is in fact against folding hands and it never says that the Prophet Muhammad (SAWA) folded his hands but it says that the Prophet (SAWA) said: As if I am seeing the Rabbis of Bani Israel putting their right hands on their left Hands in their Prayer.
It is in fact against folding hands in Prayer because it proves that it is a Jewish practice. That is why Sunni Ulama don't mention it to prove folding hands but they mainly mention a narration of Sahl ibn Sa'd in Bukhari (740) saying: People were been ordered to fold their hands during Salah. He never said that the Prophet did that, nor ordered it. People were obviously been ordered by the governments to do so.