卻是個謠言 It Was Only A Rumour
行者聞言，暗自驚疑道：「這廝看見我了？若未看見，怎麼就知我的名字，又知我會變蒼蠅？」原來那小妖也不曾見他，只是那魔頭不知怎麼就吩咐他這話，卻是個謠言，著他這等胡念。行者闻言，暗自惊疑道：「这厮看见我了？若未看见，怎么就知我的名字，又知我会变苍蝇？」原来那小妖也不曾见他，只是那魔头不知怎么就吩咐他这话，却是个谣言，着他这等胡念。
逐句解 Line by line
Hearing it, Pilgrim was startled and doubtful, and said to himself, "This creature has seen me?
暗自驚疑 is startled and suspicious in private — the whole reaction happens inside. For once Pilgrim is the one being frightened by a report.
And if he has not seen me, how does he know my name, and know that I can turn into a fly?"
The reasoning is sound and the conclusion will be wrong, which is the shape of nearly every argument in this chapter. He is doing what Tripitaka did with the old man: taking a coincidence for evidence.
In fact the little demon had never seen him either. The demon chief had somehow given him this to say, and it was nothing but a rumour, which he had been set to chanting in this fashion.
The narrator steps in to settle it, which this book does rarely and always when a misunderstanding would otherwise run too long. 謠言 is a rumour, a thing put about. And 著 here is zhuó, the causative — set him to it, made him say it — a different band from the four durative ones a few lines earlier.
The narrator's intervention is the structural point of the passage. We are told flatly that the demon has not seen anything, so the reader watches Pilgrim reason himself into a false conclusion knowing it is false.
What the demon chief has actually done is brief his patrols on a known enemy, which is ordinary competence. Pilgrim reads it as detection because it is uncomfortably accurate.
It is also the first time in the chapter that anybody has out-thought him, and the person who did it has not appeared yet.