He might well have actually seen her, but -well- he didn't recognize her as Genesis close up so wouldn't have done so from a distance either. Not that Sephiroth was going to be baited into bringing up the subject that he'd just bluntly dropped.

Never mind the fact that he wasn't expecting to see anyone recognizable, considering these faces had to be conjured by his slumbering subconscious.

"We probably just missed each other. There were a fair few passengers that boarded at the last stop."