"2007 code"

Better check your year again.

The NEC is on a 3 year code cycle.

2005, 2008, 2011

Localities can adopt it as they see fit, and make changes also.

What inspector? The electrical inspector for your governmental building inspections unit? Or a housing inspector for HUD or some department controlling existing housing? Or someone called a home inspector?

OKay. I will double check on that. Does this sound normal? Have you heard of this in other areas? Reason I am asking is because the inspector was filling in for the normal inspector that is out on vacation and he kept having to call back to the office to ask questions. Kinda makes me wonder if he knows what he is doing!!

Florida is now on the 2008 code. While the code doesn't strictly say "all circuits must be AFCI or GFI" that's a lost a practical matter.

The AFCI requirement is:

. All 120-volt, single phase, 15- and 20-ampere branch circuits supplying outlets installed in dwelling unit family rooms, dining rooms, living rooms, parlors, libraries, dens, bedrooms, sunrooms, recreation rooms, closets, hallways, or similar rooms or areas shall be protected by a listed arc-fault circuit interrupter, combination-type, installed to provide protection of the branch circuit.

The GFCI requirement says

All 125-volt, single-phase, 15- and 20-ampere receptacles installed in the locations specified in (1) through (8) shall have ground-fault circuit-interrupter protection

and then goes to list locations: Kitchens, outdoors, bathrooms, basements, garages..

Note there is a difference in the two requirements. GFCI applies only to receptacles. AFCI applies to all outlets on the 15/20A circuit (for example, lighting).

Now if you'll notice, that the house receptacle circuits are pretty much split between areas that require AFCI and those that require GFCI. There may be a few random 15/20A circuits (for example lighting circuits serving GFCI areas such as Bathrooms, Kitchens, and Garages) that don't need to be protected with AFCI.

Note that circuits larger than 15/20A don't require AFCI or GFCI protection. Nor do the 240V ones.

If your home was built in 2007 I guarantee you it was up to code at the time since you are living there and obviously have a C of O.
If it was up to code then it is up to code now.

A house built in 2007 in Florida would need only comply with the 2005 code. The 2005 code mandates AFCI only for 15/20A 120V circuits serving bedroom outlets.

Does the furnace breaker incuded in the AFCI requirement?

The requirements are as I stated. Unless someone put your furnace in one of the living spaces (I guess you could have a basement rec room with an unenclosed furnace), there's no requirement for AFCI.

If you're talking the 2005 code, it only applies to bedrooms.