A fine monk indeed! Truly:

好和尚 is the storyteller's cry of admiration — "there's a monk for you!" — the same formula used of Bajie earlier. The tag is scene-setting and rides with the verse it introduces.

His eyes would not look upon unwholesome forms; his ears would not listen to lewd sounds.

惡色 is not ugliness. 色 is the Buddhist term for form, the whole world of things that can be seen, so 惡色 is a sight that does you spiritual harm. The opening couplet states the discipline that the rest of the piece then acts out.

He held that brocaded, delicate beauty to be so much dung and soil, that gold-and-pearl loveliness to be so much dust and ashes.

The two halves are one figure split down the middle, matched right down to the two different words for "like", 如 and 若. Brocade beauty is dung; gold-and-pearl loveliness is dust.

All his life he has loved only the practice of Chan; not half a step will he stray from the ground of the Buddha.

參禪 takes 參 as cān, to practise or investigate. The character has two other readings and neither applies: shēn, which belongs to ginseng, and cēn, which belongs to things being uneven. 一生 takes yì before the first tone of 生.

How should he know to cherish jade and pity fragrance? He understands only the refining of the true and the nurture of the nature.

那裡 is rhetorical — how should he? — so 那 is nǎ. 惜玉憐香, "cherishing jade and pitying fragrance", is the set phrase for a man's tenderness towards women. 修真養性 is the standing formula of inner-alchemical practice, and the two are set against each other as the only two things he could be spending his attention on.

That woman fiend, all quick and quivering, her spring-thoughts without bound;

活潑潑 is a doubled descriptive and keeps its ordinary reading. 春意 — "spring feeling" — is the conventional figure for sexual desire, and the season does the same work in English.

this elder, stiff as a driven nail, his Chan-mind still in its place.

死丁丁 — dead still as a driven nail — answers 活潑潑 straight across the semicolon. The two doubled words are built to be read against each other: alive and quivering against dead and fixed.

The one like soft jade and warm fragrance; the other like dead ash and withered wood.

"Withered wood and dead ashes" comes from the opening of the 齊物論 chapter of the 莊子, where a man sitting in trance has a body like withered wood and a mind like dead ash. Here a Daoist image is put to Buddhist work without anyone remarking on it.

That one spreads the mandarin-duck coverlet, her lewd humour thick upon her;

淫興 takes 興 as the noun xìng, an appetite or mood — against the verb xīng, "to rise", in the battle poem earlier in this same chapter. 鴛衾 is the coverlet figured with mandarin ducks, which pair for life and are the standard emblem of a married couple; putting one on the bed is about as subtle as rose petals.

this one draws tight his monk's robe, his cinnabar heart steadfast and bright.

褊衫 is the monastic upper robe. 丹心 — the cinnabar heart — is the standing figure for undivided loyalty, normally political; here it is transferred to religion.

That one would press breast to breast and thigh to thigh, and pair as luan and phoenix; this one would face the wall, return to the mountain, and seek out Bodhidharma.

面壁 recalls the nine years Bodhidharma is said to have spent sitting facing a wall at Shaolin. This is the widest the piece ever opens: one appetite in the first line, one patriarch in the second.

The woman fiend loosens her clothes, making display of her fragrant flesh and sleek skin;

解衣 takes 解 as jiě. 賣弄 is to show something off deliberately, not merely to reveal it — the display is the point.

the Tang Monk gathers his lapels, keeping close hidden his coarse flesh and rough hide.

緊藏 takes 藏 as cáng, to conceal, not the zàng of Tripitaka's own name — the one place in this chapter where the character carries its other reading. And 糙肉粗皮, coarse flesh and rough hide, is deliberately unlovely set against her fragrant flesh and sleek skin. He is running himself down on purpose.

Says the woman fiend: “My pillow is to spare and my quilt lies idle — why should we not sleep?”

枕剩衾閑 packs two matched subject-and-predicate pairs into four characters: pillow to spare, quilt lying idle. From here the piece turns into matched question and answer — eight exchanges, one line each.

Says the Tang Monk: “My head is shaven and my habit strange — how should I keep you company?”

相陪 takes the mutual xiāng. Notice that he declines on grounds of dress and haircut rather than doctrine, which is very like him.

Says that one: “I would gladly be the Liu Cuicui of a former reign.”

前朝 takes 朝 as cháo, a dynasty. Liu Cuicui is the courtesan of the play 月明和尚度柳翠, in which a monk is brought down by a woman and a second monk later delivers her. She is casting herself in a part and inviting him to take the matching one.

Says this one: “This poor monk is no Moon Ācārya.”

And he refuses the part. 闍黎 is the shortened form of the Chinese transcription of the Sanskrit ācārya, a preceptor, and the pair reads shé lí. The automatic tools read the first character as dū, which belongs to a city gate-tower and is wrong; the reading is fixed across the corpus as a set phrase. 月闍黎 is the monk of the same play — the one who falls.

Says the woman fiend: “I am fair as Xi Shi, and more willowy still.”

娜 is always nuó here, never nà, and 嬝娜 means slender and swaying. Xi Shi is the byword for beauty in Chinese the way Helen is in English, and for much the same reason: a face that started a war.

Says the Tang Monk: “And for her sake the King of Yue was long at burying the dead.”

The edition prints 越王, the King of Yue. In the story as usually told it was the King of Wu whom Xi Shi was sent to ruin, Yue being the kingdom that sent her; the 世德堂本 reading is kept as printed. 埋屍 is taken here as the burying of the war-dead the scheme produced, which makes Yue the one doing the burying rather than the one buried. See the commentary.

Says the woman fiend: “Royal brother, do you not recall the saying — better to die beneath the flowers, for even as a ghost one is a gallant?”

寧 is nìng, "would rather", not the níng of tranquillity that the automatic tools supply — the character sits in no guard list and this was caught only by probing. 教 is jiào. The couplet she quotes is a thoroughly worn tag from the romantic drama, the Ming equivalent of quoting a pop lyric to win an argument.

Says the Tang Monk: “My true yang is my most precious thing — how should I lightly give it to you, a painted skeleton……”

真陽 is the primal yang the battle poem called 元精 — the same thing under a third name. 粉骷髏, the powdered skull, is the standard contemplative image for the body beneath its cosmetics, and it is a brutal thing to say to a woman who has just undressed. The trailing dots are the chapter's only ellipsis, genuine punctuation in the source, kept as printed. 真陽為至寶 takes 為 as the linking wéi, not the purposive wèi.