I think he absolutely knew the whole truth. He's probably hoping it's not ALL true. But everything they say matches up to what he knows.
I think that's one reason why he ran (though not as far as Lantis) and lived incognito and AWAY FROM EVERYONE. Even wandering about as a traveling entertainer seems to have gone right out of the window now things are going down. He's staying far enough away that he doesn't have to know when things start going wrong. That's why they're confirming things - all he's trying to do from the start is work out if they're really the potential magic knights, if things have got that far.
I think he may have been trying to find the escudo because if HE had it then the knights wouldn't have their swords wouldn't be able to summon the mashin wouldn't be able to hurt her. But I think mostly that's just a story he was using to be able to stay with the Knights and watch them, see if they were the real deal. When they start dealing with Alcyone, that's when he knows it IS real, and knows what's coming. But they're GOOD PEOPLE, too.
I would not put it past him to have thought of getting rid of them himself. But Emeraude would just summon more people - and he knows his sister hasn't got this wrong. That's why he's been watching them.
That's why he lets them go, and then goes back to the place he's doing some good, because I think Ferio is actually in the Forest of Silence because he's trying to keep the nightmares from escaping and hurting people and Cephiro. I think he's patrolling it because that's all he can think of to do to help - he knows this is his sister's wish. He knows he can't fight it. He probably doesn't want to hang about a bunch of people who think that the magic knights are going to turn up and rescue her - because how painful would THAT be? So he's exiled himself to do what he can to help Cephiro stay whole just a little longer, to help his sister just a little longer.
I think, also, that this has been coming for long enough that it's been years since he knew this was coming. He's been mourning her the whole time, just as Clef has been, just as Lantis is mourning for his. Even if he's been pretending otherwise, even if he's been hiding where he wouldn't hear any rumours, even if he's been waiting where he's bound to run across anyone trying to get to Eterna - even if he's been watching the monsters increase and now they're confirming it's people's fears because this is going down NOW. All they're doing is confirming what he didn't want to know until he had to. (We have a panel of him, eyes shadowed, as he accepts this - just like the panels of Clef's eyes being hidden as he doesn't tell them the truth.) And he won't tell them who he is.
And that's why he's able to put on a front and why he's still standing in Rayearth 2 - he's been in mourning since before she died. At least they ended things. At least they granted his sister's wish.
She was the Pillar. He could never have stopped her wish. And he knew it.
He doesn't contradict what Clef told them. He gives them a bit more information. He's probably still hoping that somehow they might help her, some other way, if they don't know their own purpose, but he won't go with them and he won't watch this go down.
The whole 'Zagato stealing Emeraude away' thing - he probably knows it's not that simple, but he also knows that she loves Zagato, she might go with him willingly, he might tear her away from the world to try to protect her - it doesn't matter what the actual truth is, because the only thing it means is his sister has not come back to soothe her people and her land, and that means this is the ending.
~CHEERY HEADCANON~
