Just curious...have you tried to disable STP on BFD MAD physical ports? ...something like, per each BDF MAD ports used (so specifically on Ten-GigabitEthernet1/0/40 and Ten-GigabitEthernet2/0/40 in your case), stp disable.
Port Link Mode and Port Link Type should [*] be, respectively on each BFD MAD physical port, set to port link mode bridge and port access vlan 1010 (a setting, this one, you already have done).
#
interface Ten-GigabitEthernet1/0/40
description BFD-MAD_IRF_Member_1
port link-mode bridge
port access vlan 1010
stp disable
#
#
interface Ten-GigabitEthernet2/0/40
description BFD-MAD_IRF_Member_2
port link-mode bridge
port access vlan 1010
stp disable
#
Have you also checked the SFP Transceiver status on IRF Member 2 Port 2/0/40? Is the Port OK?
northe wrote: Do I need 2 BFD MAD links for the 2 devices?
AFAIK no, with only 2 IRF Members...the IRF Stack requires just one single direct link (IRF Member 1 to IRF Member 2) for setting up the BFD MAD feature...that's is especially true because you are using Common Ethernet ports (and not Management Ethernet ports)...that configuration doesn't require an intermediate device just a single direct link between the two IRF Members (see here).
[*] As reference see here.
P.S. What Software Version is your IRF Stack currently running on? latest version Comware 7.10 R2432P03 fixed a (and also incorporates various previous) BFD MAD related issue.